By Paul Byrnes, VP of Distributor DevelopmentYou know that an inefficient supply chain can lead to financial losses, but are you aware of the toll it can take on morale? Any disconnect from purchasing and procurement right on down to the customer sale can have an impact on every member of your team. When you have an efficient supply chain, it becomes evident through your motivated team and happy customers.
A successful supply chain strategy allows you to adapt to changes in relationships and market conditions. Here are two ways to start optimizing your processes for improved profitability and company morale:
Identify your best suppliers.
Improving your supply chain efficiency can feel like a daunting task. Start by identifying the must-have brands that are requested by your customers and provide the best financial results for your company. Are you optimizing those relationships for maximum results? Consider the volume, profit and relationships you have with these brands and look for ways to expand on them further. For each product category, ensure you are making the most of the Preferred NetPlus Supplier buying group programs available to you, including NetPlus Advantages and rebates.
Review purchase and inventory plans.
Once you identify your best supplier partners, take a look at your purchase and inventory processes to uncover unnecessary costs that could be harming your distribution company's financial health. For instance, you may be purchasing directly through many of your first-string suppliers. Buying everything direct may provide a slightly higher gross margin, but likely results in slower-moving inventory. Consider your entire supply chain costs, including warehousing, freight and cashflow, and look for solutions to unnecessary spend, bottlenecks or availability issues.
Then, you can take this opportunity to consolidate brands and review your current wholesalers for less efficient brands. Using wholesalers as extensions of manufacturers allows you to source non-strategic brands more effectively, and have a backup in place for strategic brands. The NetPlus Alliance supplier list has over 400 brands and several wholesalers to choose from.
Think of your supply chain as a crew boat, with multiple rowers working towards a common goal. If any one of those rowers are not working in unison with the others, you may find your crew remaining stationary, or worse yet, rowing in circles.
By reviewing your supply chain regularly, you give yourself the opportunity to understand your supplier partners better, your sales team better and ultimately your customer better. This helps you make informed decisions that can increase cash flow and profit, while eliminating inefficiencies before they become a major problem.
Plus, the data you receive from these reviews can guide your internal team to spot problem areas within the supply chain. Consider offering bonuses to staff who identify kinks in the chain and work to solve the problem, such as improving inventory turns, reducing dead stock, paying less freight or converting a non-rebate supplier to a Preferred NetPlus Alliance supplier. The result is a better functioning company with more satisfied employees.
Learn more about how NetPlus Alliance helps distributors tighten their relationships with existing suppliers, as well as gain access to new ones, to better serve their customers.