Warehousing and logistic managers face unprecedented supply chain issues on multiple fronts: a labor shortage and related people-training challenges, ever-increasing consumer demand, cyberattacks amid digital transformation, a highly competitive selling market, ongoing disruption — the list goes on. To position your organization for success, here are eight strategies for achieving a thriving business.
1. Be responsive to customer requirements. Develop a supply chain that is adaptable to changing customer expectations. Start by defining the ideal customer experience, then align upstream and downstream supply chain to achieve this goal. However, be prepared to update your definition of an ideal customer experience as expectations change. To be prepared for all scenarios, upskill your supply chain staff with the required customer service expertise. In addition, establish a central command that coordinates responses to extreme disruptions, including updating affected customers and generally communicating the short- and long-term process changes amid the disruption.
2. Develop supplier partnerships. A contract is not enough; for great service, build great partnerships founded on mutual trust, flexibility, openness, and shared risk and reward. Forming such partnerships elevates the relationship and ensures your orders are treated as a higher priority during a supply chain upheaval. And when you become a customer of choice, you have a safety net to mitigate supply chain risk and enhance your capacity for business continuity.
3. Leverage AI. Artificial intelligence (AI) is not just a means for streamlining operations and bolstering efficiency. With it, organizations can accumulate valuable data to drive better decision-making and ensure a supply chain can adapt to market changes. The average business today deals with an extraordinarily large volume of data. AI can help break this down into actionable insights. Further, it can identify unstructured sentiments, such as helpful comments on social media, and organize them into useful information.
4. Master warehouse slotting. Slotting aims to optimize warehouse efficiency by determining the most efficient slot for each item. For example, a facility manager might place a faster-selling item in a slot closer to the loading dock. Slotting usually occurs at the stock-keeping-unit level. However, in some instances, it might be more useful to slot products by category. Then, assign pickers to a specific category, in which they will be well versed in product nuances and more likely to pick the correct item faster. Note that slotting may need to be updated frequently if you deal with seasonal products or other special promotions. It also should be revisited whenever there is a temporary spike in demand for a particular product.
5. Manage and minimize returns. If you’re selling a product, returns are inevitable. According to a National Retail Federation survey, the average retailer had $166 million in returns for every $1 billion in sales in 2021. A weak returns procedure creates bottlenecks; a well-thought-out process mitigates the extra cost of returns and better positions these items for resale. Planning for returns starts with developing procedures that prevent returns from happening in the first place. Then, develop a strategy to prevent each type of return. For example, provide available dimensions of products and incorporate videos in product descriptions to minimize bracketing and wrong-size orders. Then, have a classification strategy for each type of return to easily determine which items can be prepped for resale, such as wrong-size orders.
6. Continuously monitor supply chain risks. COVID-19 showed how quickly a stable, predictable supply chain can be disrupted. The more prepared you are for disruption, the better you can blunt the impact. Start by mapping out how a disruption at a key supplier would affect your production, logistics, pricing and customer relationships. Then build out plans to buffer against these effects. However, be sure to balance any risk mitigation plans with the demerits of over-optimizing, such as carrying too much inventory. Consider investing in supply chain visibility to monitor the market as well as activity within your organization and at your suppliers so that you can sense disruptions early and put your plans into action as soon as possible.
7. Get the right talent. Every employee plays a key part in supply chain performance. However, some roles are more crucial to the process than others. You want these mission-critical positions staffed by individuals who have proven skill and experience in supply chain. They should have a demonstrable record of planning and managing logistics, including coordinating the full order cycle, as well as competence with tracking inventory, organizing storage and distribution, resolving problems and complaints, complying with laws and regulations, and monitoring and analyzing performance metrics. They also need the soft skills to be able to liaise and negotiate with suppliers and manufacturers.
8. Be ready for what’s next. The business environment is never static: Change is the norm, not the exception. Companies that consistently thrive are the ones that are agile amid this change. Set out to build flexibility into your supply chain by following the tips in this article. This way, you’ll be prepared for whatever comes next.
Will Schneider is founder of InsightQuote, a matchmaking service for business-to-business services. He is passionate about helping businesses find the right solutions to improve their operations. Schneider also writes about fulfillment services at Warehousing and Fulfillment.
Learn about the Supply Chain Warehousing Certificate, the self-paced, online program, developed by ASCM in partnership with Prologis.