Manufacturers have certainly started 2015 off right — the U.S. manufacturing industry added over 20,000 jobs in January. This, combined with an overall jump in U.S. hiring and a dip in gasoline prices, has resulted in factories keeping busy in 2015. For manufacturers, this means competition will rise, providing opportunities for manufacturers to invest in their businesses and standout within the industry. Now is the time for manufacturers to consider revamping how they track supply chain networks. Here are the top three reasons why:
- Improve customer service: Tackling the customer-driven market shift we have seen over the past few years is now officially at the forefront of any savvy business’ strategy in 2015. And for manufacturers in particular, this could not be truer. As consumer demand changes from “right product, right place, right time” to “any product, any place, any time,” the need for manufacturers to provide excellent service to their customers who must respond to consumer demand has reached a crucial point. Manufacturers must swap out legacy applications that can’t support today’s supply chain complexities. This means manufacturers must be able to execute an order efficiently and effectively – as quickly and accurately as possible. However, it is almost impossible to deliver on this without overall visibility – from visibility of inventory at point of order through to shipment. Providing details regarding events and alerts allow businesses and their logistics partners to address an issue either before it occurs or as soon as possible afterwards, ultimately improving customer service for all stakeholders.
- Mitigate compliance risk: In order to ensure compliance with U.S. government regulations, manufacturers must concentrate on two fronts. The first is complying with legislative requirements like Denied Party Screening and Security. The second is the filing of all applicable documents, many of which today can be processed electronically with the customs authorities to comply with the customs import and export processes. Some, if not all, of these requirements will necessitate manufacturers to work with their partners to gather all the information needed to meet the demands of U.S. Customs and Border Protection. This can be a lengthy process, and users who do not have the tools to file inbound or outbound shipments electronically will fall behind competitors who are able to spend time on innovation and customer service instead of paperwork. Ultimately, if customers are consistently not receiving products on time due to compliance issues, they are more likely to choose another vendor to work with in the future.
- Increase bottom line: Supply chain managers often lack the visibility into their total shipping spend, and carrier invoices are often difficult to manage due to a variety of factors, including disparity among carriers and file formats. In order to decrease spend on operations and increase bottom line, manufacturers need to understand variances between anticipated costs and actual carrier invoice costs, allowing them to manage expenses through a controlled and organized process. This gives customers a better idea of what they will pay to ship products, and also saves manufactures time and money wasted on reconciliations. This is a critical overall component of understanding true landed costs. And in today’s world, “landed” may mean the cost to deliver to the customer’s doorstep. Getting complete control over multiple transport modes and the costs involved in any and all shipments can significantly improve a manufacturer’s ability to fine tune the bottom line.
So how can a manufacturer best revamp their supply chain and gain the visibility and insights they need to improve customer service, mitigate compliance risk and increase the bottom line? Replace legacy IT systems that don’t offer the flexibility or detail that today’s technology offers. Many manufacturers either can’t find an off-the-shelf replacement or are put off by the size of the task of implementing a new solution, particularly if the vendor or their project teams are defining a large amount of expensive customization to meet existing business processes. It is the existing business processes that have more than likely been inhibited by the legacy systems. Instead, businesses should consider how they can be more efficient and effective by adopting best practice processes supported by a best-of-breed solution.
The newest supply chain systems are more flexible and scalable than ever, and with both hiring and spending up in the New Year, now is the time for manufacturers to consider implementing a new supply chain strategy and system to keep ahead of competitors. Organizations whose systems don’t allow them to be quick to market with new service offerings, or to keep up with the pace of their customers, will be left behind.
Bob Farrell is the CEO of Kewill