Top 3 mistakes in supply and logistics

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When it comes to running a company you may think you have it all covered, but unfortunately, supply chain and logistics can easily fall by the wayside. In this article, we will be providing you with the top 3 mistakes (and their solutions) so you and your company can run smoothly and mitigate risk.

#1: Prioritizing one supplier

We are all guilty of this one. After all, there is so much pressure to meet those numbers. This also means that your suppliers are typically places in two boxes, one of who supplies the majority of your good and the other guys. Years ago this would have worked, but with the advent of outsourcing its no longer relevant.

A single-source supplier is no longer a reliable partner in fact it becomes the biggest risk factory to a broken supply chain. Instead, look to diversify with multiple supply chains to mitigate risk. You can read more about this process at Benjamin Gordon Cambridge Capital.

#2: Accountability

Passing the buck is not only unprofessional it can cost you your entire supply chain. Setting up the proper accountability partners such as your Chief Procurement Office and their staff will create clarity as well as a higher level of quality assurance. If each person has a specific part of the chain that they oversee you can also monitor and prevent major issues.

Each person then receives the proper training and tools as opposed to one person juggling everything. This also speaks to the interaction along the supply chain itself. Managers are responsible for the following: delays in delivery, quality and supplier issues, a sudden increase in demand in tandem with supply shortages.

With so many items on their plate, it is easy to miss critical steps. This is why proactive management is critical to ensure the right logistics all the way through. A great manager will take accountability, meet with their team regularly to discuss back-up strategies and avoid potential disasters.

#3: Taking on too much too soon

This is a big mistake many people make. Being lazy on proper testing and going through important protocols can wind up in major financial loss. This is also common when a newer company has the opportunity to expand and doesn’t consider its current limitations.

Overpromising a large quantity of product within a certain timeframe without clarity of what and how they can deliver can cost millions and also can damage your shares as well. Instead, utilize your logistics team to predict issues and create systems to see if the order can safely and effectively be created, tested, and delivered within that timeframe. Better to get more time if necessary than over-promise and under deliver.

In a famous case the candy company Hershey’s lost 8% of their shares when they overpromised on a gigantic $100 million order by Halloween that could have been avoided. Similar issues can come up with financial and ethical detriment like the case of Nestles. In a rush to get orders turned over they neglected to look into workforce conditions only to discover their products had been made under forced labour in Cambodia.

Conclusion

Avoid these mistakes when setting up your supply chain. Don’t put all your eggs in one basket. This goes for accountability as well. The more responsibilities are delegated the lower the overall risk and critical errors are made. Be sure to investigate all risk before promising large deliveries on products that require time, testing, and proper distribution.


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