How to Manage Supply Chain Delivery
GRADUATE STUDIES | 4 MIN READ
Managing the delivery end of the supply chain means constantly negotiating between inventory, cost and time.
With consumers growing more and more accustomed to receiving their orders the next day—or even the same day—supply chains have been more and more focused on the delivery portion of their processes. Supply chains that want to remain successful, that is.
We can define successful delivery as getting your customers what they need—in the right amount, at the right time—and doing it consistently. Delivery now rates as the most fundamental requirement of any manufacturing or distribution business.
Problems with delivery can stem from multiple sources. You might have long lead times, poor forecasting or ineffective product management. And while a poor delivery performance obviously goes in the “bad news” column, good delivery at an unacceptably high cost doesn’t help your company in the long term, either.
Inventory depends on demand, and demand is tied pretty closely to the not-entirely-predictable whims of the consumer. That can cut both ways. Inventory can pile up due to an overestimation of demand for no-longer-hot commodities. Similarly, stock-outs can occur due to the underestimation of demand or the inability to fulfill requests for suddenly on-trend items.
To avoid getting burned, you need to create an accurate forecast.
Forecasting Supply Chain Demand
Forecasting demand is an art and a science. First, let’s acknowledge that forecasts will sometimes fail. Thoughtfully made forecasts, however, help reduce unnecessary supply and more quickly and efficiently meet consumers’ needs.
An effective forecast often hinges on good communication with the other members of your team. Professionals who oversee delivery must break through any physical or workplace-culture boundaries that separate members of the supply chain.
To begin with, the sales force can help you review and analyze past trends. Work with sales colleagues to predict changes over the coming year and outline a monthly prognostication.
Then, you’ll need to talk with operations managers to see if processes are in place to meet the forecasted demand. Production capacity or labor might have to be adjusted. You’ll need to loop in your suppliers, too, to verify that they have the capacity to meet demand.
Meanwhile, supply chain delivery often requires some additional delegation. Every product or group of products to be delivered needs a manager to oversee the optimal distribution network utilized in delivery. These managers will also analyze the sales, revenue and costs to determine which products perform well and which do not.
When a new product goes into consideration, the team will suss out what will be needed to incorporate it into the delivery plan. Similarly, if an old product is being eliminated, the team will decide how to phase it out to minimize obsolete stock.
Infrastructure and Efficiency
Efficient and cost-effective delivery also means putting the right supply chain network infrastructure in place. How many distribution centers will you need? Where will they be located? How large do they need to be? What is the role of each facility, and how does it serve others? Will your firm own them or source them?
To answer those questions, you have to weigh several factors, among them:
- The cost to produce and hold inventory
- Your transportation needs
- The cost of facilities and maintaining them
This leads to another question. How stable is the demand for your product? Stable demand allows you to design more economic supply chain networks. Instability requires that the networks be more flexible and responsive.
However you configure it, delivery must be on time and in the desired amount. That’s the ultimate goal. And even if those metrics look good, your customer could be less than satisfied. The best way to truly know how you are doing is to ask.
Ultimately, your customers will tell you whether or not you hit the mark.
M.S. in Supply Chain Management
Care to learn more about the ins and outs of supply chain delivery? Then learn more about Elmhurst University. When you enroll in the Supply Chain Management master’s program, you will join a cohort that meets on campus one evening a week with faculty members who are experts in their field.
In addition, you’ll increase your aptitude for today’s—and tomorrow’s—business environment by taking a deep dive into delivery, logistics, sourcing and purchasing, customer relations, and more.
Request more information today!