Far too often operations leaders view ‘the supply chain’ as an endless cost center rather than an opportunity to gain an edge on their competitors. Because of this, misconceptions over supply chain decisions handcuff organizations from improving operations & ultimately improving business outcomes.
Optimizing supply chain performance can be complex, but busting a few common myths is a great starting point that can have a significant impact on your business. At Veryable we’ve helped hundreds of businesses see through the myths and optimize their performance through our on-demand labor marketplace.
In this article, we’ll address three common supply chain myths and how you can become more competitive by seeing through them.
Myth #1: Increasing accuracy is more important than increasing agility
Even pre-pandemic, demand forecasts were not a silver bullet but rather one of many factors that help deliver favorable results. COVID-19 and other supply chain disruptions have further solidified that the right balance of accuracy and agility enables supply chains to know sooner and react faster when changes happen.
Because demand forecasts are never 100% accurate, you need the agility to pivot and respond quickly to disruptions if you want to provide the best service levels for your customers. Doing so requires the precise labor capacity you need to meet and respond to daily or weekly demand fluctuations.
When your warehouses see a sudden increase in demand that you weren't quite expecting, how do you compensate for that without incurring too much additional cost? How do you avoid excess costs associated with keeping up or losses from letting your lead times get too long?
If you have to be flexible by using overtime or accumulating a backlog, you are constrained by labor and are a victim to the belief that demand forecasts are an end-all solution. Instead, you could be capturing these ebbs and flows of demand by flexing your headcount from a labor pool of familiar operators.
Essentially, when you deploy skilled, on-demand labor against your operational needs, you become incredibly agile and flexible to attack any gaps where you may be hurting. That could be shipping, receiving, material handling, or even more specialized work.
With this strategy, your lead times decrease, allowing you to push more revenue out the door and driving down your cost per unit.
Myth #2: Supply chain visibility will solve my supply chain problem
You’ve invested in lead inventory & order processing tools, new warehouse management platforms, and a plethora of other IoT technologies to help meet new customer needs. You’ve even effectively executed end-to-end supply chain functions, and by doing so you’ve saved your team incredible amounts of time and energy all while prioritizing all the milestones of your customers order through supply chain visibility.
However, even with all the right tools and softwares, relying on a fixed labor capacity will not solve your issues caused by week-to-week supply chain disruptions. Nor will it allow you to conquer seasonal peaks in a cost effective way.
No matter how well you can see your issues, you still have to fix them. One way to think of it is that a magnifying glass can help you find a splinter, but it’s not much help when it comes to pulling it out. The same goes for supply chain visibility; just because you can see your issues doesn’t mean they’re automatically solved.
You’ll have to use the information you have gained about demand, inventory, and processes to form a strategy to respond to the frequent changes. This usually means making changes to your existing processes or capacity as quickly as possible. It comes down to balancing accuracy and agility.
Myth #3: Supply chain improvement requires a massive digital transformation project
It might seem like you need to go all-in on a huge digital transformation project to stay competitive, but this is not the case.
In fact, you can make small changes to see massive impacts over time. Sometimes, the results might come more quickly than you expect, but they certainly add up when you’re constantly making improvements. This is in line with Lean thinking, and continuous improvements don’t have to be major overhauls.
Most businesses who are making digital improvements to their operations are doing so in pursuit of goals that you can affect with small changes here and there. In fact, most digital transformations happen little by little over time.
In pursuit of lead time improvements, more efficient inventory management, and other operational excellence initiatives, there are plenty of changes you can make that won’t take a year to execute. This could mean tweaks to your process, layout, or capacity. In general, when you see the opportunity for an improvement, however small, make a note of it and place it in a queue so that you can implement it as soon as possible.
How Veryable can help you prove the myths wrong
With the on-demand labor you find through Veryable, you can gain the agility to respond to changes in demand and make continuous improvements. You can build flexibility by adding workers you’ve contracted before into your labor pool, and invite them on demand when there’s more work than your headcount can handle.
Learn how you can adapt this strategy to meet your business goals by reading our explanation of what on-demand labor is.