7 Common Pitfalls When Business Owners Invest in Supply Chain Services

Supply Chain Services

Success in logistics can take serious effort and investment. For most small and midsized businesses (SMBs), effective supply chain management will require coordination between manufacturers, anticipating disruptions, and preparing for fluctuations in supply and demand. Many SMBs, as a result, look for outside help with supply chain management. There’s a growing industry of supply chain services that can automate management, help businesses track inventory, and improve relationships with suppliers.

However, not every service will meet every need a company may have. Some common pitfalls can seriously limit the benefits an SMB gets from supply chain services. These are six of the most common pitfalls that SMB owners make when investing in supply chain services — and what you can do to avoid them.

1. Not Building Relationships With Suppliers

Building good supplier relationships can provide significant value for your business.

If you work with a supplier for a long period of time — communicating regularly and building trust — they may start to think about their success as being tied up with your success. They may be more willing to provide advice, prioritize your orders, or offer preferential pricing.

Investing in supply chain services can help you identify which suppliers you depend on and help you establish better two-way communication. However, this information may not help you build stronger relationships by default. Acting on the information you gather and prioritizing key suppliers can help you build strong relationships, unlocking essential benefits for your business as a result.

2. Incomplete Understanding of Your Suppliers

Similarly, many SMBs who invest in supply chain services face problems because they don’t ask questions when building relationships with suppliers.

If you’re an SMB owner, you need as much information on the supply chain as possible. Ideally, you should know each of your suppliers, who they rely on, and how they schedule operations. Even simple questions can go a long way in preventing disruption. For example, learning that a particular supplier stops manufacturing around the end of the year can help you anticipate shortages and avoid bottlenecks.

While supply chain services can help you manage supplier relationships, it’s still important to ask questions to avoid unexpected disruptions in the supply chain.

3. Not Using the Best Available Tools

The modern supply chain is increasingly complex. That means manually managing logistics and keeping track of supply chain data is becoming less and less practical.

There is a growing range of supply chain and inventory management tools available. These tools facilitate automate order processing and packaging, identify inefficiencies, and coordinate activities across the supply chain. For example, many supply chain experts say that storing and analyzing customer data is essential to efficient supply chain operations. By using a tool to break down that data, you may have a better chance of anticipating demand fluctuations and identifying seasonal demand patterns.

Using these tools can also help you store data, visualize the supply chain and develop a better understanding of the relationship you have with your suppliers. If the supply chain services you invest in don’t include modern tech or tools, you may continue to struggle with the same problems you faced before investing.

4. Mismanaging Inventory

Inventory control is often one of the biggest challenges SMBs face. You may rely on a number of warehouses to hold your inventory, each of which may supply several channels through which you sell to customers. This complexity, combined with unpredictable demand or a changing audience, can easily lead to loss, overstocking, overselling, or other inventory mismanagement issues.

Inventory management software is one of the most valuable tools to help with this problem. These platforms help you track inventory, predict demand, and manage your network of sales channels and warehouses. If you invest in supply chain services without also investing in these tools, you may find yourself still facing many of the same inventory challenges.

5. Forgetting About Cyber Security

The modern supply chain is heavily reliant on digital technology like business networks, new tools, electronic records, and online communication platforms. These technologies make managing the supply chain much easier, but they also expose valuable data and critical systems to hackers.

Many businesses forget about cybersecurity when investing in supply chain services or technologies. Others make a different mistake. They invest in good cybersecurity tools, provide training and follow good practices, but they don’t ask their vendors about their security.

Cybersecurity in the supply chain has a lot to do with your own use of technology and networking, as well as how your vendors keep data secure when it’s in transit or when stored in their company’s network. Vendors without documented hardware acquisition, data stewardship, and cybersecurity practices could be putting confidential information at risk if you provide it to them.

In the same way that you’d want to vet vendors to get an understanding of their capacities and procurement processes, it’s also a good idea to know how they keep their data safe. This information can be essential if you go on to build cross-business networks and databases that your companies share.

6. Not Investing in Supply Chain Visibility

Supply chain visibility (SCV) is the ongoing effort to track parts, components, and finished goods as they move from manufacturers to their final destination.

Improving your SCV can help grow your understanding of the supply chain while also making it easier to offer customers updates. Over time, SCV can also help you predict supply fluctuations and identify bottlenecks in your logistics operations. Without investing in SCV or tools that help improve visibility, you may not have the full picture of your supply chain — or, at least, may not be able to offer real-time updates to clients and customers.

SCV can also provide major competitive advantages, as just 6% of enterprises report that they have end-to-end visibility of their supply chain.

7. Not Updating Tools and Supply Chain Data

The market is constantly changing. If you’re not gathering new data and updating your tools, you may be missing out on new developments or cutting-edge technology.

Regular investment in supply chain services is necessary if you want to get the most out of these services. Continuously gathering and analyzing new data will also help ensure that you have the best understanding possible of your business’s supply chain. Updating tools can also help ensure good supply chain cybersecurity, as developers regularly patch vulnerabilities and upgrade platforms to be more resilient against cyber attacks.

Get the Most Out of Your Supply Chain Services Investment

Supply chain services can help any business better manage logistics. However, the right tools alone aren’t always enough.

In many cases, a small or medium business can also secure serious competitive advantages by building strong supplier relationships, improving supply chain visibility, and optimizing inventory management.


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