Managing the health of a business is kind of like maintaining a healthy body; everything is interconnected and neglecting one thing tends to sacrifice the wellbeing of the whole.
No amount of 6 a.m. crack-of-dawn workouts can offset the impact of four doughnuts, three cheeseburgers and 32 ounces of coffee per day. With those consumption patterns, it won’t matter how many burpees you do, they’re never going to stand a chance.
The same can be said for running a company. Sure, your product might be the best in its class and your leadership team’s vision for the future could be rock solid. But if your inbound, outbound and distribution supply chain can’t efficiently meet demands and smoothly support your efforts, it doesn’t matter.
Too often though, good businesses fail to recognize the shape their supply chains are in until it’s too late. These companies — through no fault of their own — don’t see the bigger picture, displaying what their supply chains could be. Instead, the delays and congestion they experience are chalked up to a momentary lapse or an insignificant one-off blunder.
In reality, though, many of the daily supply chain issues businesses experience have causes rooted at the foundation of their processes and partnerships.
Here at Anderson Trucking Service (ATS), we’ve been offering industry-leading transportation services since 1955. During this time, we’ve seen first-hand how difficult it can be for many companies to see the kinks in their supply chain simply because of their adjacency to it.
This article will help you solve these issues today and recognize their presence should they pop up in the future.
Below, you’ll find an in-depth overview of:
- The 4 largest indicators of an unhealthy supply chain.
- What you can do to improve the health of your supply chain going forward.
Opening your eyes to these issues isn’t easy initially, but that makes it all the more important. Let’s talk about the true markings of supply-chain health, and make sure to take note of anything that stands out to you — it might mean there are ways for you to optimize going forward.
What Does an Unhealthy Supply Chain Look Like?
As previously mentioned, sometimes it’s difficult for businesses and their logistics managers to recognize repeat struggles for the categorizable supply-chain issues that they are.
In turn, without this understanding, these companies can’t take corrective action — which ends up costing them dollars and customers over time.
This doesn’t have to happen to you. Although there are plenty of signifiers of a larger issue in your supply chain, let’s talk about the most common ones you’ll see.
The four largest indicators of an unhealthy supply chain are:
- Continuous poor service from stakeholders.
- Delays on productions cycles.
- Consistently unpredictable expenses.
- Lack of standard operating and response procedures.
1. Continuous Poor Service From Stakeholders
No company operates on an island. Every good business has both internal and external stakeholders, every piece of which is dependent on the success of the whole.
That said, not every stakeholder — especially externally — is consistently high quality.
For companies that manufacture, fabricate and/or produce products — products that they turn around and ship — inconsistent service levels from providers can be damaging.
Whether it’s the vendors you purchase raw materials from, or the transportation providers you frequent for outbound capacity, routine failures should never be acceptable. These companies should value your business just as much as you value theirs. And, should the service levels of your providers drop off, you’ll want to address these issues head-on.
But what does repeat poor performance look like?
Consider this scenario:
Let’s pretend, for a moment, that your company produces mattresses. Not the cushy comfortable, memory foam mattresses, and not mattresses that give their user a custom sleep number or anything either.
No, your company takes pride in sticking to the way things have always been done and, as such, is standing by the conviction that, “humans have been sleeping on spring mattresses for over a century, there’s no reason to switch it up now.”
That’s right, your company makes good ol’ fashioned spring mattresses. . . sign me up!
With that established, let’s talk about the logistics of this thing. You see, the metal framework and springs that your mattresses are made of aren’t produced in-house.
For this reason, you’ve developed a bit of a reliance on your suppliers — one that fabricates the framework and another that produces mattress springs. There’s nothing wrong with that; the business world is full of inter-business partnerships because working with good suppliers is a great way to cut down costs and improve efficiencies.
Last month, however, the company that sends you a regularly-scheduled truckload of springs fell through, leaving you with a bunch of metal framing, heavy cloth and foam rubber to work with, but no springs. . .
This isn’t the first time this has happened either. In fact, your spring manufacturer has missed multiple appointments over the past few months, sighting “a mix up on our end” each time. Although you’ve been able to weather the delays this spring shortage has caused in the past, it’ll likely impact your ability to service customers in the future.
The on-time performance of your suppliers — and all providers for that matter — is hugely important, and repeat failure will keep your mattress firm from meeting customer demands.
However, this spring manufacturer isn’t holding to its commitments. Something about your arrangement isn’t working for them, it may be time to get to the bottom of what that “something” is.
How to Improve The Performance of Stakeholders
Just like your customers are counting on you to deliver on your promised product/service, you should hold stakeholders to the same standard.
Hold your supplier and transportation network accountable for their commitments.
Clearly define your performance needs for each external company, develop scorecards to use with each of them and regularly check in on the key performance metrics that matter to your partnership.
Should something slip, schedule meetings when a discussion is needed and, most importantly, don’t hesitate to cut ties when warranted.
In our free-market economy, you don’t need to accept poor performance — particularly from transportation providers (there are plenty to choose from).
Related: Transportation Provider KPIs: How to Evaluate The Performance of Your Network
2. Delays To Production Cycles
The second indicator of a supply chain that needs some work, is the re-occurring presence of unpredictable production delays. The start-to-finish completion of a final product is intimately tied to the performance of many processes and stakeholders.
Whether your company manufactures seasonal goods or has cargoes moving at all times, unhealthy production delays are stoppages that possess one, or more, of the following characteristics:
- They are seemingly impossible to predict.
- They leave your customers in the lurch.
- They set your company’s timelines back significantly.
- They make it difficult to keep inventories in check.
- Their root causes are hard to pin down.
Delays in your company’s production supply chain with these characteristics aren’t always easy to overcome. That said, they typically stem from several areas including but not limited to:
- Shoddy transportation provider performance on inbound and outbound freight-shipping commitments.
- Production delays at vendors, forcing them to put your needs on the back burner.
- External supply chain congestion, i.e: port issues, weather delays, miscommunication of crucial information.
- Production inefficiencies
- Miscommunication between internal stakeholders.
- In-consistent employee training and management.
- Inaccurate inventory management.
- Unrealistic expectations for systems and employees.
With the proper diagnosis and response, each of these issues can be resolved over time.
How to Combat Delayed Production Schedules
Prolonged delays in your production timelines will hinder your ability to fulfill your supply chain at all levels. Though the root cause of these issues will vary, the way you should respond to them won’t.
Do an internal and external analysis when delays rear their heads. What went wrong and how can you make adjustments to optimize with the help of external partners?
Most importantly, avoid production delays by understanding the targeted turn-rate of your inventories so that you aren’t left over-promising and under-delivering for customers. Make sure that you have enough inventory on hand to battle past potential delays on your vendor’s behalf.
You won’t want to put yourself in a position where your ability to service customers hinges on the performance of your vendors. Avoid just-in-time inventory procedures wherever possible and work with your transportation providers to schedule inbound shipments well before you need them.
3. Consistently Unpredictable Expenses
As one of your business’s core decision-makers, you understand the importance of maintaining a budget. Doing so helps your company serve customers and weather a tough storm whenever necessary.
Working with reliable suppliers and transportation providers helps your company achieve these ends more than you may even know. You see, without working with companies that can quote your shipments and orders correctly, budgeting for these expenses can quickly become impossible.
And, as delays, unmet commitments and unexpected charges pile up, the health of your supply chain will quickly plummet.
Tactics for Handling Unpredictable Expenses
Be sure to make note of each time your supply chain makes it difficult to predict the monthly expenses associated with it and do some critical thinking:
- Are your vendors more expensive than you anticipated?
- Is this because they quoted you incorrectly or because of miscommunication?
- Is it next to impossible to project your cost-of-goods-sold into the future?
- Why are your internal expenses rising? Are there production inefficiencies that need to be addressed?
- Are your transportation providers charging you more than in the past or falling through consistently?
- Is this due to an adjustment in overall market pricing?
The answers to these, and similar questions should leave you with good indicators as to which aspect of your supply chain is falling short and give you a clear path forward.
Great businesses — with reliable supply chains — have no trouble budgeting on a monthly and quarterly basis. Address these issues now so that yours can be better going forward.
4. Lack of Standard Operating and Response Procedures
If your company doesn’t have systems in place that dictate the actions of key personnel to keep your supply chain moving, you’re opening yourself up to risk — especially should something go wrong.
Some of the best supply chains on earth got to where they are because of their built-in operating protocols — and responses for situations of failure or incident.
Look, the business world — particularly when it comes to the transportation of your freight — is fast-paced. In recognition of this, the healthiest supply chains have standard procedures in place to help them in the most urgent of circumstances.
Guidelines as to what steps must be taken to offload inbound goods, during the production of final commodities, to arrange for the transportation of freight and for a hundred other core actions, are crucial. Many businesses simply don’t have them in place though.
The gapping wholes in the supply chain of a business without standard operating procedures is only compounded when things go wrong. You see, without standard operating procedures to lean on in times of difficulty, a company’s ability to respond efficiently and effectively is left up to chance. You’ll want to avoid this where you can.
How to Develop Standard Operating Procedures
Don’t leave developing these procedures to the last moment.
Meet with each of your business’s core stakeholders individually. In these meetings, performance baselines and outline what’s expected of them when something goes wrong. These conversations should be had with the vendors you frequent, the transportation providers you utilize and all employees involved in your supply chain.
Externally, the businesses you’ll want to work with will have pre-existing systems in place for providing their service at the highest level. This includes how they’ll respond when things go awry. That said, every business is different and your needs probably won’t match their current procedures to a T.
As such, you’ll want to put together a custom plan of action with each of them.
Match their operating procedures with your own by:
- Expressing your overall goals for each partnership.
- Explaining where you’d like to be in a year (or other time period) and how you expect them to help you get there.
- Pinpointing what will happen when a delay occurs.
- Outlining the acceptable margin for error in response times.
- Deciding who is responsible for handling each recovery activity and who’s required to pay for what.
Agreeing on the handling of each of these core actions will help your supply chain — and partnerships — flourish for years to come.
ATS Can Help You Get More From Your Supply Chain
Optimizing a supply chain isn’t easy — especially with too many hands in the mix.
That said, with good providers in your corner you’ll find it far easier to do so.
Here at ATS we take pride in helping customers meet their transportation deadlines, maintain their budgets and come through for their customers. Often though, their ability to find a truck makes it hard for shippers to achieve these ends.
Enough is enough.
As transportation experts, we understand the things that shippers can do to make their freight more appealing to truck drivers looking to get the most from their allotted hours of service. It’s time you understood this too.
Download our free 12-Part Guide to Finding a Truck Faster and never miss a deadline again. Your supply chain will thank you for it.