Supply Chain Management Mistakes Your Business Might Be Committing

Any entrepreneur knows how much blood, sweat and tears go into the building of a business and how a single wrong decision can bring the entire structure tumbling down. That is not to say that all mistakes are equal, some are learning opportunities and others are the result of negligence. The problem with the latter is that businesses often don’t know that they are straying into negligence because they are too focussed on the long term to focus on the vital aspects of running a business. Supply chain and logistics is one of them and often the most neglected despite its vital importance in the scheme of running a business. No business, however great or small, has been immune to supply chain negligence and the newspapers are filled with stories of e-commerce giants tripping up due to logistical and supply chain issues. Wondering how your business can improve? Here is a small list of the most common mistakes businesses make to help you out.

Rampant automation: Yes, automation is THE next thing in supply chain management, but that doesn’t mean that one should implement it without a thought. For starters, it may not be the right fit for many aspects of your supply chain. Secondly, it can cost a bomb without delivering the ROI you expected. Approach automation with caution instead of headlong abandon and implement it in batches instead of all at once.

Being ignorant of freight costs: Not understanding the complexities behind one’s freight costs can turn out to be quite expensive for a business. Knowing the finer details, such as what pricing structure is the most suited to your needs can help you save money and set up a smoother supply chain. This may seem like common sense on the surface, but the sad fact is that many businesses tend to ignore this crucial aspect of their supply chain.

Spending too much on maintaining an inventory: Let’s be clear, inventory burns money.  All it does is sit there and not help with your bills. Having a well-stocked inventory may make you popular with your consumers but the benefits are outweighed by the costs of maintaining it. Many a company has faced the problem of overstocking eating into their profit margins. Which is why engaging the services of supply chain consultants can be so crucial for a business. Remedies like implementing a pull manufacturing strategy can also help.

Not paying attention to data: Another basic mistake that businesses commit when it comes to their supply chain and logistics strategy is to not pay attention to their data. This is a shame as it can help them identify the leaks in their supply chain and help create strategies to plug said leaks. Using data as the basis of making decisions can only help in making good decisions.

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