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Building up your supply chain could save your business

says Mike Forryan of MF Logistics

The challenge from overseas to British industry has never been greater. With industrial growth taking place in previously latent countries such as China and areas of Eastern Europe, businesses in the UK are eager to minimise costs and maximise margins. But this streamlining process comes at a price – what if too many layers are stripped away and not replaced?

Manufacturers, retailers and distributors must look to their supply chain – if this collapses then the ripple effect on a business can be devastating. With companies looking to cut costs in order to compete with countries such India where labour is cheap, or China where acceptance into the global economy is now assured, the danger is that too many key skills, personnel and procedures will be discarded. This false economy often starts with the supply chain.

Consider what happens when you play a game of Jenga: what starts out as a strong and sturdy structure is weakened with every block removed. Eventually, the tower will collapse. Your supply chain functions in the same way. So, is it flexible and efficient, or have you weakened its structure to the extent where it is simply a matter of time before it crumbles?

A well balanced supply chain incorporates 12 key areas to enable the chain to function competently – and just like the Jenga bricks, each feature is an integral part of the whole supply structure.

Purchasing – changes in procedures and staffing within purchasing departments can drastically weaken the supply chain – communication and clear systems must be in place for this block supports the whole structure of any company.

Finance – this block is universally acknowledged as fundamental, but is not always managed efficiently. One key area is the maintenance of MRP systems and product material masters -problems here can have dramatic effects on a business.

Customer Services – customer services are the public face of your business – invest in their training and support – if your customer isn't happy, they will soon go elsewhere.

The Customer – it never ceases to amaze me how many businesses do not listen to the views and needs of their customers – they are the founding block of your whole business.

Transport and packaging – packaging must be fit for its purpose and mode of transport – if not goods will be damaged in transit causing customer dissatisfaction and incurring unnecessary expense.

Warehouse – systems need to be in place to ensure adequate space for housing goods with an actively managed flow inbound and outbound.

Despatch – these departments often have direct data links with the carrier. A company may often use multiple carriers which means that multiple processes are frequently used within the despatch area of which everyone needs to be aware.

Pick and Pack – data accuracy and product knowledge are essential to your business structure: they ensure the speed of service which is so important within many industries.

Sales – sales staff need information on product availability .Customers will be seriously displeased after placing an order only to be told later that delivery is delayed.

Warehouse – returns are often seen as a secondary problem with no one taking day to day responsibility for processing them – eventually this will cause any organisation difficulties.

Inbound Logistics – importation of goods from low production cost countries can be an excellent way to generate higher margins, but be prepared for complications in your supply chain.

Business Planning – many businesses pride themselves on a detailed business planning process, especially where new products are concerned, but it is important to make sure that all aspects of the business are taken into account.

Mike Forryan MILT FIFF, a director of MF Logistics, has worked in the global transport industry for over 25 years. He has worked with UK and continental European import procedures and regulations in road, rail, air and sea transport covering domestic operations, import and export services. Mike has operated within the global forwarding market, the third party logistics market and within manufacturing and distribution industries. He can be contacted on 0116 288 8001 or see www.logistics-consultants.co.uk for more information.

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