The Importance of Due-Diligence in Supply Chain Management
Any business that exists throughout the entire world will form a part of a supply chain, or can define itself as one. Defined in loose terms as the network that connects entities, be they individuals or organisations, supply chains govern the journey of products or services from their creation through to delivery and consumption. Whilst some can be embryonic processes that concern an individual person creating and selling to another person, developed supply chains can involve multi-step processes which transport goods and services all over the world and involve numerous different organisations with differing capabilities.
Whatever the size or scale of a supply chain, and the nature of the goods or services that are being transported, there are common practices that can be taken as rules in making a supply chain successful. This article examines the common pitfalls that befall many, explains to how to avoid them and details how Sante ensures strong and reliable supply chains by applying its 6 Pillars of Trust procedure.
How to Avoid Common Problems in Supply Chains
01 Inventory Control
As described earlier, supply chains are all about how goods or services that have been created are delivered to the consumer or end user. By this very definition then the most important aspect is controlling inventory, and making sure there is the right amount available for the next stage in the chain. This applies whether you are involved in the creation of the goods or services, or any of the downstream stages.
If you have too much inventory, you run the risk of having cash-flow problems with too much money tied up in stock. The product can also expire in cases where the stock has a shelf-life, or just lose its buying ability and saleability over time. Have too little stock, and you risk becoming unreliable and losing business because of shortages.
Whilst there is no easy way to determine exactly what inventory you should hold, studying trends and patterns in buying behaviours, as well as careful planning and attention to detail, can help to establish an optimal stock level.
02 contingency planning
Things never go entirely to plan – so much can be taken as a fact. It is therefore important that you have contingency plans in place to deal with eventualities that might rise. Key considerations may be:
01 Is there any risk of suppliers I depend on going out of business?
02 Are there alternative supplies in place if a certain product cannot be procured?
03 What will be the time and money disruption to my business if there are upstream supply issues?
With any logistics that involve two or more entities coordinating with each other, communication is always key. As aforementioned some sort of disruption or unexpected happening can be taken as a near certainty – which makes it crucial to have a strategy to deal with them. Whatever the strategy you decide is, it can only be formulated and executed effectively with constructive communication, made possible by transparency between parties.
Although there may be commercial information that you cannot share, establish lines of communication with partners both above and below you in the supply chain which allow you to talk openly and freely about issues which arise. Put into place non-disclosure agreements so that all parties are protected and can work together unreservedly to resolve issues, knowing that each other’s commercial interests are protected.
Another important way to guarantee unexpected challenges are resolved efficiently is to introduce traceability through barcoding and lot numbers. Put into place a robust system which allows all parties to quickly have information of the facts. By having an easy to understand and undeniable record, any problems which occur can rapidly be pinpointed, identified and overcome.
05 attention to detail
Paying proper attention to detail in every aspect of a supply chain won’t make it work for you – but not giving the time it needs and making sure you get the details correct will certainly mean it fails. While it’s easy to see the participants in a supply chain playing a big and central role in the process, consider also that the smaller players without which a supply chain cannot function. Practical things to consider in making your part of the supply chain work include making sure you know in fine detail everything about the product you are purchasing (if you are not the manufacturer of a raw material at the base of the supply chain). Whether you are selling goods or services, all will be governed by regulations that are relevant to where the product or service is going. Ensure that whatever you are working with complies with local legislation and is registered with the relevant authorities. Other details that can be overseen also include taxes, import duties and custom charges. Ensure you do not suffer from eroded profit because of unforeseen charges.
Santé 6 Pillars of Trust
At Sante Group, we pride ourselves in delivering reliable and secure supply chains. This is made possible by applying our 6 Pillars of Trust policy, born out of years of experience and expertise in sourcing to meet supply chain challenges across the entire globe.
Supplier Validation – We use top tier law firms in the origin country of where the product is being produced in to scrutinise supplier legitimacy and their ability to ability to supply.
Lab Testing & Validated Quality – Many products that we source require laboratory testing, which we independently verify in country of destination to ensure that all results are accurate and dependable.
Authenticity & Traceability – All certification or registration certificates are verified to ensure their authenticity.
Quality & Ethics – Third-party audits are always conducted before placing orders to ensure social responsible principles & carbon footprint standards are upheld.
Contractual Compliance – Our global legal teams understand the complexities of multi-national agreements and proactively mitigate risk through international best practice contracts, giving the peace of mind of ongoing cost and supply certainty.
Guaranteed Supply – Underpinned by our holistic approach and robust quality control procedures, we stand 100% behind consistent quality, cost and delivery.
Santé Group is an end-to-end supply chain organisation, working with our clients to source, de-risk and deliver their critical or problematic bulk supply chains. Our 6 Pillars of Trust methodology is taking the most critical and complex buying processes, and consolidating them into one single, simplified, risk-mitigated solution. Talk to us today to find out how Santé can help improve the resilience of your supply chain.