Even with an amazing procurement team, bad things can still happen.
Here’s the good news – a supply chain debacle doesn’t have to occur on your watch. That is, if you can learn from the mistakes of others.
With that in mind, here are 7 common supply chain mistakes and how you can avoid them.
1. Being Too Ambitious With New Operations
Ambition can help you move mountains. It can enable you to push the envelope, to innovate and to lead your industry.
Ambition can also get you into trouble.
When Target expanded operations into Canada, they tried to do too much too soon. Instead of easing into the expansion, they tried to do much of the heavy lifting all at once, which ended in disaster when their procurement systems couldn’t keep up.
The result: Target pulled out of Canada and, as a result, suffered a multi-billion dollar loss.
The take home message? Aggressive, ambitious plans are fine, but make sure you have the data necessary to make sound business decisions.
2. Poor Timing of System Upgrades
Upgrading old technology, systems and processes is always a good thing, especially when they are slowing your progress toward reaching your goals.
But updating those systems should not happen just before a known busy period.
When you know you’re going to have a high volume of transactions, that is not the time to pressure test something that’s brand spanking new.
Instead, implement new technology when things are a little slower. Give your team time to become comfortable using it and to work out all the kinks. Then you’ll be ready to handle larger volumes and bigger stakes.
3. Incomplete View Of The Supply Chain
Supply chains can be fascinating.
When they operate well, supply chains can manage a bunch of moving parts almost seamlessly. Everything is exactly where it needs to be when it needs to be there.
However, if you don’t have full visibility of the entire process, you’re setting yourself up to encounter a ton of problems.
It’s kind of like seeing an iceberg, and only thinking that what is visible from the top of the water is what you have to contend with.
In reality, the things you don’t see, have the most potential to harm your supply chain (or your boat).
Therefore, to make sure iceberg syndrome doesn’t happen to you, spend time mapping the entire journey and processes needed to complete a project or a task from start to finish.
This includes where your materials come from, and all the different stops and checks that happen along their journey from supplier to your company.
When you have full visibility of everything that needs to occur, you can put a plan in place to overcome any “icebergs” that stand in the way.
4. Ignoring Data Trends
Data is your friend. Today, you’ve got more of it than ever.
Think of data as a crystal ball. By analyzing all the trends that have happened in the past from a variety of data points, you can obtain a much clearer picture of your business reality.
You can use this information to predict what is likely to occur in the future based upon the information you have.
Make analyzing your data a priority. Look at it regularly, see what it’s trying to tell you, and then adjust your strategies and approach accordingly.
5. Being Overly Optimistic
Optimism, like ambition, can be a positive trait.
Or it can get you into serious trouble, if you only think of all the great and wonderful things that can happen as a result of something you implement, without considering what could go wrong.
Because no matter how much you plan, something can always go wrong. And you have to be prepared.
Sweeping existing and potential problems under the rug doesn’t mean they don’t exist, so make sure you do contingency planning.
If necessary, bring in the biggest pessimist you know to help poke holes in all your scenarios, so you’re able to consider all the different ways your plans can crash and burn.
In the end, you’ll be more than prepared to tackle any obstacle that tries to throw a wrench in what you’re trying to do.
6. Working With Too Many Suppliers
Diversification helps to minimize your risk, so it makes perfect sense to want to work with multiple suppliers to diversify your offerings, and make sure you don’t become too dependent on one vendor.
However, working with too many suppliers can do you more harm than good – that’s because each supplier you work with has to be managed.
The more people you work with, the more effort it takes to manage quality to ensure it’s up to your standards.
Therefore, to make sure you don’t have too many cooks in the kitchen, identify the minimum amount of suppliers you need to get everything you need with a level of risk that you are comfortable.
7. Making All Your Decisions Based Upon Price
It’s a great feeling when you’re able to negotiate a great deal on something you want. And while procurement departments tend to be masters at sourcing the materials needed at low prices, there is danger in always letting price be the determining factor.
As systems grow more complex, and customers more savvy, customer service continues to grow in importance.
So, make sure you’re clear on what your baseline criteria for supplier selection is, what the priority level is for each, and then use that to evaluate the proposals your vendors bring to the table.
You Don’t Have to Repeat the Same Supply Chain Mistakes
Be smart, work smarter. Don’t fall into the same traps many other supply chain professionals have become entangled in over the years.
Learn from the battle scars of others instead of earning your own.