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How to Develop an Effective Supply Chain Strategy for Your Business

A dependable supply chain strategy can make or break a business. In the age of Amazon Prime, customer expectations have increased considerably. Consumers expect items to be abundant, affordable, and delivered quickly. To meet these increasing demands, a business must have a strong supply chain strategy that accounts for all of the regulatory, logistical, and shipping demands that modern businesses face every day.

Use Technology to Manage Your Supply Chain

You already use technology to manage your financial statements, your customer relationships, and even your social media schedule. Likewise, technology should be at the center of any effective supply chain strategy.

Your supply chain has countless moving parts. You have to manage the inventory, the logistics, the distribution, the financial accounting, the legal red tape, and so much more. You need an efficient solution that’s capable of overseeing your supply chain and providing real-time updates so that you can identify inefficiencies, address any problems that arise, and keep your inventory moving.

A good transport management system (TMS) can be invaluable for your supply chain strategy, as it helps you to manage the physical movement and incoming and outgoing goods while ensuring that shipments meet all regulatory requirements. Inventory management software is also critical for any business with a robust product line. A lot of ecommerce businesses make the mistake of relying solely on the inventory management feature provided by their shopping cart platform. While this might suffice for businesses that only sell a few dozen units a month, it’s a huge mistake for companies that deal in large volumes—as these tools are ill-equipped to manage physical inventory. And if you have to manage things like freight shipments, it’s especially important to have a robust solution at your fingertips.

Consolidate Supply Chain Decisions

If you have several people managing your supply chain, you’re inevitably going to run into bottlenecks. Important decisions will be delayed, key aspects of the supply chain will get overlooked, and your decision makers might not always reach a consensus on how to manage the supply.

While you’ll almost always need multiple people overseeing the supply chain, the important supply chain decisions should be allocated to one high-level individual. Often, the CFO or controller will fulfill this role within the organization. They should have a clear understanding of how the supply chain works and what the general supply chain strategy is.

Two business people making strategy notes in front of a laptop

Align Your Supply Chain Strategy With Your Business Strategy

An effective supply chain strategy is just one component of your larger business strategy. So define what that larger strategy is, and then bring your supply chain strategy in alignment. As an example of a supply chain strategy that meets this standard, consider a business that emphasizes one-day shipping as a key selling point. This business would need to incorporate speed and efficiency into its supply chain strategy to ensure that they’re able to meet this commitment on a consistent basis.

Whether your overall business strategy involves minimizing costs, automating day-to-day operations, or providing a wider selection of inventory than the competition, you have to consider the implications for your supply chain—or more specifically how to ensure that your supply chain strategy supports this broader goal.

Familiarize Yourself With All International Shipping Standards

You may have the most efficient strategy in the world, but if you aren’t well-versed in international regulations and standards, you’re going to run into serious issues. If you ship internationally, make sure to familiarize yourself with standards like the Incoterms® (International Commercial Terms), the IMDG (International Maritime Dangerous Goods Code), and the DGR (Dangerous Goods Regulations).

When you understand the intricacies of shipping overseas, you can make better decisions for your own supply strategy. For example, certain goods—like coffee, alcohol, and CBD oil—can be costly and difficult to ship overseas due to excessive regulatory requirements. When you understand the regulations, you can fine-tune your strategy to determine which goods are eligible for international shipment and which goods might require special treatment or a domestic-only policy.

Bring Your Supply Chain Into the 21st Century

A supply chain strategy is like any other business strategy: it needs to be achievable, actionable, and tied to your organization’s bottom line. That’s why it’s so important to automate whatever you can, whether through outsourcing, technology, or simply eliminating any inefficiencies that don’t need to be there.

Need an example of a supply chain strategy? Our logistics blog is filled with helpful resources to help you improve efficiency and fine-tune all of your inventory-related operations. If you need assistance with optimizing your own strategy, reach out to Partner Trade today. We lead the charge for warehousing and logistics services on both coasts of the U.S., and we can help you to achieve smooth operations for every facet of your supply line.