3PL companies strive to minimize transport costs and maximize the abilities of meeting their clients’ most demanding logistics needs. When it comes to logistics, the type of products to be transported, the method of transportation and the distance of transportation determines your ability to derive value from working with a third party logistics company. The efficiency of your supply chain is dependent on the level of efficiency of each component in the supply chain. In any company, you should be able to measure performance; the easiest way to determine whether the process is adding value to your company or not. Benchmarks should be set to determine the acceptable limits of performance given certain business environments.
There are a number of ways for a business’ supply chain management system to go awry, but most of these tend to be external factors that can be combated with proper analysis and planning. Here are the four most common supply chain practice flaws a business might be subjected to:
1) Delays in Delivery
Any company that implements a streamlined supply chain management process must review the best practices for their business with the goal of providing guaranteed reliable delivery of raw materials and finished goods. This involves building a productive and positive relationship with suppliers, customers and warehouses. If any of these parties does not perform their role on time, there is a high likelihood that the entire process will be delayed, which is likely to cause direct consequences on all the parties involved. Every link or contact in your supply chain must be dependable and consistent, or else there is a risk of losing valuable business.
2) Price Increases
One of the most important aspects of having a supply chain management system is fostering lasting relations with suppliers and customers, which allows your business to maintain stable prices. If you cannot guarantee stable prices for the final product, there is a red flag that there is an inconsistent business plan in place. You can counteract the most common problems—namely the increased cost of doing business and increased fluctuating product costs—by categorizing these factors as either internal or external, and then devising a plan to combat each problem.
3) Poor Information Breakdown
In an effort to guarantee seamless supply of raw materials and finished goods, companies enter into agreements with stakeholders to deliver certain cargo on specified dates or at certain inventory levels. This eliminates the need to regularly place orders for such goods while also removing potential incidents of running out of stock and/or losing sales. However, there are times when the suppliers may deliver goods at the wrong time or place or even deliver the wrong goods entirely. This is a sign of lack of coordination and adequate information breakdown in the supply chain and can have devastating effects as it may lead to stock outs or production of poor quality goods due to use of improper inputs. For this reason, it is important to have back-up plans in place to counteract any problems that might arise from outside forces.
4) Increased Product Costs
Any company wants to have an efficient supply chain to be able to monitor various product costs to guarantee that they remain within manageable limits. This involves maintaining an optimal inventory level, which ensures that incidents of stock outs and subsequent lost sales are avoided. Other costs that are often central in determining product costs are transportation costs. This may be associated with lack of reliable logistics service providers and other key costs in supply chain. Switching transport providers often involves some additional spending thus the hitches in the reliability of supply chain management systems.
In the end, there are many variables to consider when planning and streamlining your business’ supply chain. The best option is to plan ahead for almost any inconsistency or potential problem. It’s best to have several plans waiting in the wings, ready to replace a link in the supply chain should it no longer cooperate with your business’ strict regimen.
Of the many third party logistics services offered, Land-Link Traffic Systems provides an analysis of a business’ supply chain management, along with an assortment of options to best improve and streamline a supply chain. This will reduce the risk of flaws in a supply chain system in the long run. To learn more about services that could improve your supply chain, click below!