Building a sustainable supply chain is essential for the longevity and success of the business. Pressure from investors, customers, and stakeholders to create a sustainable supply chain has increased over the years. To build a sustainable supply chain, many environmental, economic, and social elements can be managed and improved to optimize processes, find new product innovations, save costs, and conserve resources.
Creating sustainability in the supply chain is a continuous ongoing process to consistently enhance the system that will lead to a robust and sustainable supply chain. However, if companies are not building with sustainability in mind, this could be a huge potential risk to the future of the business.
Here are six key steps to build a sustainable supply chain:
1. Visualize The Process
Understanding, planning, and building the supply chain or proposed supply chain is a vital first step. Companies won’t be able to improve their supply chain process if they don’t have a visual or map of the actual process. This makes analyses of the supply chain a lot harder, especially if it is a global company or a complex supply chain.
This is a true starting point as a map will help find risks and inefficiencies in the supply chain process. The supply chain map will show how resources are being used every step of the way and help identify challenges or hiccups that are slowing down the production process. It also provides a framework for every employee in the organization to understand how the flow works and how it impacts the customers. This is extremely important as each employee realizes the importance of the processes and value provided to the customer.
2. Forecasting Customer Demands
Supply chain organizations have ranked forecasting demand as a major challenge in meeting their supply chain goals. Forecasting is a vital component of supply chain strategy to ensure sufficient inventory levels are maintained to meet customer demand. Forecasting gives an estimate of the number of products the customers will purchase in the near future. This data allows organizations to proactively prepare and work on,
- Strategic activities like budgeting, financial planning, risk assessments, and devising mitigation plans or any expansion planning.
- Operational activities like material planning, purchasing, production planning, logistics, and resource planning.
Sustainability is providing what customers want from the business without any surplus products. Creating products that don’t sell is a waste of time and money. Predicting the demands will enable organizations to deliver the right product at the right time to the customers.
The use of appropriate forecasting tools and methods will help in estimating the demand and developing a plan to drive a seamless supply chain process. The key is to choose the most effective and flexible methods/tools to ensure forecast accuracy. Using data and analytics can further help in ensuring a more efficient and sustainable supply chain.
3. Effective Collaboration & Setting Expectations
Collaboration should be the core of the business. Encouraging an open feedback culture in the company will allow for the collaboration of different departments to find solutions to any issues in the supply chain. When employees can voice concerns and feedback without repercussions, companies can find unique solutions to their problems. Encouraging open collaboration between different elements of your supply chain will grow the effectiveness of the entire supply chain process. According to Salesforce, 86% of employees and executives cite lack of collaboration or ineffective communication for workplace failures.
Setting expectations about your supply chain is imperative so that your stakeholders are on the same page about the status of the company. Do not over promise and under deliver. By having open discussions about goals, problems, and wins, companies can reassure the stakeholders of the future and viability of the company. Being transparent increases the trust among the stakeholders.
4. Leverage Technology
Technology assists in improving the supply chain process by automating and simplifying the entire process. Technologies such as Robotic Process Automation (RPA), Internet of Things (IoT), should be leveraged to automate and streamline the processes to enhance productivity and efficiency. By automating parts of the business that are mundane and repetitive, the employees and business can focus on big picture goals while gaining a competitive advantage over the competition.
Technology also allows companies to evaluate and analyze processes such as transportation management, inventory management, and order management. Additionally, technology enables communicate effectively by instantly and seamlessly connecting with different parts of the supply chain process.
5. Train & Educate Employees
Employees are the most important assets. They are the reason companies can scale the business to a higher level. Creating a culture of open feedback and education equips employees with the resources they need.
Invest in a consistent and thorough training program for the employees to make sure that every employee understands the mission, vision, business processes, and organizational goals. According to ClearCompany, 68% of employees say training and development is a company’s most important policy. Employees want to do a good job but need to be equipped with the proper knowledge and skills to effectively carry out the company’s vision and mission.
Providing proper education and upskilling employees on various supply chain best practices, technology, and other techniques will create a solid foundation to build capacity for the business. When employees are properly trained, every part of your supply chain can function efficiently and profitably.
6. Measure Performance
There is always room for improvement in the supply chain with both internal operations and supplier performance. Companies should track and leverage data to spot any inefficiencies in the operations, improve the overall performance of the supply chain, and increase customer satisfaction. Check the internal structure to see how employees function. Evaluating productivity and efficiency, eliminating outdated processes, collecting employee feedback, and analyzing data can help businesses fix bottlenecks/inefficiencies and find areas of opportunity in the supply chain process.
Evaluate supplier performance. Are they providing the type of quality, quantity, and timely delivery that is expected? Keep track of which suppliers work well with the business and develop a deeper relationship with them. Only work with suppliers that meet the requirements and can help to scale the business in the future. Re-evaluate partnerships that don’t benefit the companies mission.
Lastly, evaluate how the company is functioning compared to the direct competitors. Are there any industry best practices that could positively impact future business? Is there anything to learn from the competitor’s mistakes to protect the business? Knowing and understanding your competition can help maintain a sustainable supply chain.
Building a sustainable supply chain is imperative for the future success of the business. Focusing on these steps will help strengthen the supply chain process to consistently meet both organizations and customer demands.