With more competition, the focus of all the players in the market has shifted from concentrating only on sales for generating revenues to something which now holds the key for maintaining their presence in the market. If you are thinking it is customer care, well everyone will do it, what is so special about your effort?
Even if we look a decade back, the emphasis was always on bringing profits by greater sales, but as prices dropped and especially due to recession, the emphasis has shifted to reducing costs. One of the biggest beneficiaries of this change has been the rise of an entity right from back room to board room. That entity is logistics and supply chain management.
Sounds simple, but yet very few companies actually have control over this aspect of their business. In fact it was never thought to be important till even a few years back.An effective supply chain involves having the right product in the right quantity at the right time and also delivering to the customer on time.For that to happen, the goods must also reach your store on time- in other words, Just-in-Time(JIT). It involves a great deal of estimation, planning & execution and a glitch in any of the three processes will ultimately lead to a near disaster(and you thought it is just all about selling!). However having an effective SCM is not so easy to implement.It involves large scale investment in infrastructure and training personnel, so some companies have found it more better to outsource it to third parties.However while choosing your SCM partner following criteria should be considered:
1. JIT– how quickly can your partner deliver you the goods & also how low is the reaction time.
2. IT integration & infrastructure – never neglect the IT integration level of our partner: higher the integration,greater the chances of success.
3. Track record– Check the expertise level of our partner and whether they have delivered in similar tie-ups before. Always remember : experience holds the key.
Besides this, there are also certain other factors which must be considered while deciding on your logistics & SCM strategy( in both inhouse/outsourced scenarios):
a.Transportation: How much is the current transport levels helping you deliver service? Rate yourself regularly on a scale of 1 to 10 and ask your employees also to rate it.
b.Existing vis-a-vis proposed systems: Review clearly whether your strategies are heading in the right direction- check after each predefined timeline.
c.Other players: Analyse the strategies of your competitors and try to incorporate the best ideas into your own setup. Also do ascertain whether your decisions are being made considering accurate data (it may sound funny, but sometimes big decisions are taken on inaccurate informations- especially those purposefully spread by your competitor !)Whether a company outsources or manages the supply chain & logistics itself, one thing is for certain it is one of those areas which are only going to have increased importance with time- higher efficiency will lead to higher margins. And that’s what counts !!
Food for thought: Would you outsource or manage your firm’s supply chain in-house ?
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