Growth is a sign that your business is succeeding – but rapid growth without preparation can put that success at risk. This is particularly true for manufacturers, distributors, retailers and anyone else with a large inventory of physical product. If your business starts to struggle with managing increased orders and inventory, you run the risk of missing orders, losing customers, and reversing your growth.
Here are eight common signs that your supply chain might not be coping:
1. Sales problems:
You might be missing out on orders because you don’t have stock. Generally, customers won’t wait around and will end up going elsewhere instead. A small change that can make a significant difference is to simply begin recording these lost sales.
2. Over supply:
Too much stock can also be an issue. Some companies choose to deal with growth by increasing their inventory, which ties up cash, incurs storage costs, and can end up being a drain if it’s not sold.
3. Ageing stock:
Some businesses run into problems when they fail to accurately forecast sales. They’re then left with old and outdated stock, which won’t sell and ends up as a loss. This is particularly true of tech products, which don’t tend to stay current for long.
4. Excessive stock movement:
If you have a number of warehouses or locations, shifting stock is inevitable. But if you’re constantly moving product from one place to another, it’s a sign that your supply chain isn’t working effectively. If you’re not accurately predicting demand in different centres, paying to move stock around the country just to make a sale can rapidly eat into your profit margin.
5. Getting orders wrong:
One wrong order isn’t a huge problem, but a large volume of errors can be disastrous. Not only do you have to pay to resend the item, but you have unhappy customers to deal with. The returned product may also be unsalable and may have to be written off.
Getting orders wrong is a sure sign that your supply chain isn’t working – this could mean your staff need training, your software system isn’t recording stock properly, or your warehouse isn’t set up effectively.
6. Production problems:
For manufacturing companies, having the right parts on hand is essential. If you’re experiencing production delays because parts aren’t coming through when they should, you probably need to change the way you’re managing your supply chain. Just In Time manufacturing was revolutionary for a reason – having the right parts on hand exactly when you need them keeps the manufacturing ticking over, without incurring expensive storage fees.
7. Going with your gut:
Gut feel can be a good way to make decisions, but it’s not the best way to manage inventory. If you’re guessing or making gut decisions on stock orders, you’re probably not forecasting sales very accurately. Using the right supply-chain software can give you access to accurate, detailed sales data, which in turn helps you order what you need, when you need it.
8. Complaining customers:
Every business fields complaints now and then – some more valid than others – but if you’re spending a large part of your day placating angry customers, you might have a problem. Supply-chain issues can affect your stock levels, your order accuracy, and how long it takes for customers to receive their products. If you’re not getting this right you’re likely to lose customers and fast.
Easing the supply chain
Every business will have a range of different supply chain problems. If you’re facing a long list of issues, fixing them can seem daunting. The good news is: change in these areas can usually be solved by investing in the right business management software, along with advice from a supply-chain expert. Introducing this software can give you a significant edge over competitors, too. A recent McKinsey study found that supply chains in general have very low levels of digitisation: only 43%. The research goes on to suggest that companies who do more will boost earnings each year by as much as 3.2%.
Using software to optimise your supply chain can deliver huge benefits, including:
- Scalability: With a well-designed supply chain, you can increase the volume of sales without needing to increase the size of your team.
- Profitability: Efficient systems save time, staff costs, storage costs, and generally lead to increased profitability.
- Sales growth: With the right mix of inventory, a fast, accurate delivery timeline, and satisfied customers, you’ll be able to increase sales.
- Turonver and storage: Better inventory management increases turnover, avoiding warehousing costs and obsolete products.
- Cashflow: Better ordering processes mean your cash isn’t sitting in stock, improving your cash flow.
- Customer service: The right stock, a fast delivery cycle, and accurate order processing means satisfied customers and fewer complaints.
- Staff experience: Better processes are better for your people too – by reducing the need for manual data entry and improving accuracy, you’ll improve morale and reduce disputes.
- Compliance and best practice: Finally, efficient, visible processes make it easier for you to meet industry standards and compliance requirements.
When it comes to business, small decisions and changes can have a huge flow-on effect. Making the decision to work on your supply chain in the early stages of business growth makes sense. It sets you up to handle whatever comes your way, and helps you turn a business opportunity into success – and profit.
Contact us to talk an expert on using technology to optimise your supply chain.