Want to know the signs your supply chain needs a couple of links replaced? Take a look at what signifies a business-wide logistics issue here.
Did you know small businesses lose 500 hours managing freight shipments? Shipping is integral to supply chain management and logistics. You can probably think of something better to do with 500 hours, though.
The loss of so many hours suggests that many small businesses have a logistics issue or two. How do you know if you’re one of them? You can look for these seven signs.
1. Your Miles per Delivery is Too High
The first of our seven signs is a standard metric in the shipping and logistics industry. Miles per delivery tells you how many miles something travels to be delivered.
You can use MPD to discover how far your products are traveling to your customers’ doors. You can also use it to calculate how far your own supplies have to travel to arrive at your facility.
Ideally, shipments should travel around 150 miles. The upper limit of efficiency is usually considered around 300 miles. If you’re sending things further or buying them from abroad, your supply chain may not be as efficient as it could be.
You may be able to buy much of what you need closer to home. Distribution centers can help you reduce the MPD for your customers.
2. Stock Shortages Are Common
How many times have you gone to get a product, only to discover the shelf was empty? Maybe you couldn’t fulfill a customer order. Maybe the shortage meant you couldn’t make a new product or prepare a package.
Inventory control is a key part of your supply chain management. If you don’t have the supplies you need, your productivity will suffer.
Inventory shortages suggest poor management of stock. Someone may not be keeping a close eye on inventory levels. That might be due to staff shortages.
It could also point to a deeper problem in the supply chain, such as a shortage of important materials. It might also point to problems with your suppliers.
3. Your Logistics Issue is Related to Growth
Sometimes, growth will reveal the weak points in your logistic operations. Suddenly, you have issues meeting customer shipping deadlines. You’re facing constant inventory shortages.
If you’ve recently added customers and things have gotten bumpy, you need to look at the supply chain. There could be issues with your procedures, or a supplier may not be equipped to grow with you.
If you’re experiencing growth, then it might be time to look for a new shipping and logistics partner. They can take the burden of supply chain management off your hands. In turn, you can get back to more important tasks in your business.
4. Nobody Understands Your Processes
This issue can become plain when you have a new hire in supply chain management. They may ask questions about certain procedures. Why are things done this way?
If the answer is “we’ve always done it this way” or “because we do,” it’s time to put the brakes on. Why do you wait until the stock is at a certain level to reorder? Why do you send some shipments with one courier, but others go through another freight company?
These policies may once have made sense. You may have been working with different suppliers and shipping companies. If you’ve made any changes recently, it’s time to re-examine those policies.
There should always be a clear-cut reason for doing things the way you do. If you can’t explain it, then you aren’t working as efficiently as you could be.
5. You’re Collaborating or Merging
Mergers and collaborations can cause all kinds of snarls in the supply chain. Delayed deliveries and major service failures hurt all businesses involved. That’s why it’s so important to get ahead of potential logistics issues here.
You may not have noticed issues in your supply chain yet. The merger or collaboration will bring them to light. There’s no sense in waiting for a problem to show up though.
Review your supply chain ahead of the merger. Re-evaluate your policies. If it’s possible, take a look at the management practices of your new business partner.
Aligning your policies now will make for a smoother transition.
6. Management is Eating up All Your Time
If you have a logistics issue, you’ll likely find it takes more time and effort to manage your supply chain. Ask around and discover where your team members are noting problems.
Maybe it takes them too long to schedule shipments. Are orders being processed in a timely way? Are they having to overnight everything to make sure there aren’t shortages?
Not only does that cost more, but it could also take more time too. It might mean they need to call around to different suppliers or freight companies looking for discounts.
If your team is rushing or overwhelmed, they may make more mistakes too. They might send parcels to the wrong place or order too much stock. It then takes more time to correct these mistakes.
7. Your Team is Nervous
Logistical issues may be on the horizon if your team is expressing uncertainty. They may be concerned about a supplier’s ability to deliver. This is true if you rely on international suppliers for products or materials.
Changing political situations can cause trouble in supply chains. It’s another good reason to keep your suppliers close to home if you can.
Of course, domestic suppliers may also experience issues. A company in financial trouble may not be able to deliver when they say it will.
Keep an ear to the ground and listen to your employees when they voice concerns. If a supplier has already shorted you on shipments or a freight company has missed their deadlines, how long until there’s a bigger problem?
Acting preemptively can help you resolve issues before they become a problem.
Take Action Now
If you suspect your business has a logistics issue, keep an eye out for these signs. With careful attention, you can improve supply chain management and keep your customers happy.
Looking for more great business advice? We have tips to help you manage everything from workflows to cash flows.
