6 Tip for Managing Complex Manufacturing Supply Chains

Many supply chain management leaders cite increasing supply chain complexity as a major concern in 2022 and beyond. Supply chain complexity is caused by multiple factors including expanded services and product offerings as well as rising customer expectations for faster lead times and personalized experiences. Handling this complexity often requires increased collaboration with partners, better inventory management with suppliers, and establishing better visibility and control over all parts of the supply chain.

While supply chain complexity is caused by a variety of factors, including supply shortages or marketplace changes, changing customer expectations is one of the biggest and most consistent drivers of rising complexity. Buyers increasingly demand transparency and flexibility in their ordering process, which has led to increased innovation in the supply chain management space.

Some of changing customer expectations include:

• Faster Lead Times – Customers increasingly demand shorter lead times on all types of orders ranging from same-day shipping for B2C orders to quick turnaround for made-to-order B2B manufacturing orders. In the past, some companies may have offered faster lead times to gain a competitive advantage, but in the current climate it’s often a necessity.  

• Tailored & Stricter Delivery Expectations – Customers increasingly expect to receive accurate delivery expectations with a tighter delivery window. Gone are the days of expecting the cable guy or your shipment of vital equipment between 10 AM and 5 PM. It’s important to note that customers do not necessarily expect a faster delivery, but one that is clearly communicated to them and delivered with a shorter delivery window.

• Expanded Products & Services – The product list for many shippers has grown as a result of mass customization. Additionally, related services like technician installation and repair are also becoming more specialized. 

Growth Adds Complexity

Business aspirations also play a role in rising supply chain complexity. Many businesses plan to grow and not merely maintain the status quo. The internet and the increasing number of consumers with internet access has created a huge opportunity for businesses. Companies across many different industries can now reach a broader customer base and take advantage of new marketing opportunities or new ways of getting their products to their customers. This, unsurprisingly, has resulted in greater supply chain complexity as businesses need to support more customers and customers across a wider geographic area.

Types of business growth that increase supply chain complexity include:

• Expanding into New Markets – Many businesses expand by moving into complimentary markets, which may mean working with new suppliers and dealing with new fulfillment requirements.  

• Expanding to New Locations – Businesses may expand into new domestic or international locations. This often requires investing in new fulfillment centers and creating new partner and supplier relationships.

• Acquiring Another Business – For many years, there has been a trend toward consolidation. While buying an existing business can be a great way for companies to expand, it also adds complexity to existing business processes, including integrating new business units and eliminating redundancy. 

Managing Manufacturing Supply Chain Relationships

Manufacturers face unique challenges when it comes to managing supply chains. It’s no accident that forerunners to modern Enterprise Resource Planning (ERP) software emerged in the manufacturing space in the form of Materials Requirements Planning (MRP) software. MRP software helps manufacturers manage manufacturing processes, including production planning, scheduling, and inventory control.

Recent market changes have added a new wrinkle to managing manufacturing supply chain relationships. Specifically, manufacturers are increasingly selling their products to both resellers and consumers, which adds a new layer of complexity to selling their products. B2B customers often negotiate custom pricing and may need access to a custom set of inventory. Often, companies handle this by selling products to B2C customers on their website while having companies place orders over the phone or by email. This increases the burden on employees who need to devote extra time to handling B2B orders. Fortunately, modern software solutions help manufacturers face increasing complex supply chain relationships.

6 Tips for Managing Supply Chains   

Many businesses have used the following strategies to better manage supply chain complexity.

1. Introduce or Increase Automation

Automating manufacturing processes can help improve productivity while increasing product quality and profits. Automated manufacturing systems may also reduce labor costs and can improve worker safety by transferring some dangerous tasks to machines.

2. Standardize Processes and Implement a SOP

Standard Operating Procedures(SOP) are step-by-step instructions that outline how to perform routine business functions and operations. They standardize how employees perform a task, which improves product quality and consistency across manufacturing facilities and production lines. SOPs may be included as part of preventive maintenance (PM), quality-control checklists, inspection audits, and other processes and procedures. The best SOPs are clear and easy to understand and feature documents like flow charts, illustrations, photographs, or linked resources that further clarify the workplace instructions. In the manufacturing sector, SOPs help improve production-line efficiency, regulatory compliance, and overall product quality.

3. Improve Cash Flow and Optimize Finances

Even profitable and growing companies sometimes have cash flow problems, particularly if their financial processes or investing activities aren’t as efficient as they could be. Implementing new policies like offering discounts for early payments, creating a buying cooperative with other businesses, and using e-payments for bills can help businesses control their cash flow. Recommendations for improving cash flow include negotiating better terms with suppliers and vendors, improving your invoicing procedures, reducing days sales outstanding (dso), or testing higher pricing on some products.

4. Leverage Big Data to Make Better Business Decisions

It’s no secret that increased access to the internet and the rise of digital tracking tools allows businesses to collect far more data than ever before. By properly analyzing and using this data, business leaders can make better decisions that promote business growth and improve the bottom line.

Implementing a business management software solution like Sage ERP can also provide real-time operational insults from across your business. This allows businesses to make decisions in real-time instead of using data from last week, last month, or even last year.

5. Real-time Inventory Management

Managing inventory can seem almost impossible on top of tracking suppliers, managing your accounts receivable and payable, and adhering to a budget. Implementing production inventory control methods can help your businesses increase efficiency and reduce waste.

Many businesses deploy software to realign and automate their production inventory control activities. This provides them with end-to-end traceability for their inventory items. Automation makes this possible. Many of these automated tracking systems and tools are easy to scale and deploy. Combining software, handheld scanners in the warehouse, and a cloud inventory management solution helps businesses more accurately predict production timelines, meet deadlines, and communicate with customers.

6. ERP eCommerce Integration

Business management software like an ERP reaches into every part of your business, connecting your warehouse or manufacturing floor to sales and HR. As manufacturers increasingly sell to both resellers and consumers and handle the added complexity of managing both B2B and B2C sales, an ERP eCommerce integration can help take the load off your employees.

Traditionally, placing a B2B order has been a very manual process. Customers often have negotiated custom pricing or need access to a specific set of inventory. Placing these types of orders often involves generating multiple quotes, and multiple email threads or phone calls. Payments are often processed manually as well, or your employees may have to waste time tracking down missing payments.

An ERP eCommerce integration like E-Link integration places all those manual processes with a simple, automated solution. E-Link extends your existing business logic in Sage into your eCommerce environment. Consumers can easily log into your website and place orders, while business customers will log into a custom Business Partner Portal that gives them access to their custom negotiated rates and inventory. It’s simple and easy, and any orders placed online are automatically logged into your ERP for easy order processing.