The importance of Supply Chain training to improve your business’ bottom line
- 27 January 2017
- Written by: bemelmans
- Category: Supply Chain
The area in which most organizations face inefficiencies is often the supply chain. A supply chain is all of the products and raw materials that go into a company to the finished products that go into the consumers’ hands. It’s all about managing activities involved in planning, sourcing, makingand delivering goods which determines their costs and quality in response to customer and market needs. That long process can sometimes hinder the success of a business if not managed effectively. According to a survey by Deloitte in 2014, 79% of companies with high-performing supply chains achieve revenue growth greater than the average within their industries.
This confirms the fact that a successful and productive supply chain can increase the bottom line of any industry. Leaders have to put in place strategies to create a sustainable supply chain management strategy which will support the overall operations of the organization to achieve such competitive advantage, . A good way to do this is through training and development programs. This is because employees are the real engines that drive the supply chain and the focus should be on them if the organization wants the supply chain to function at its peak.
Training and labor management- The workforce is the key to success
Effective labor management results into higher productivity. Labor represents a major operational cost component and it is often the most misunderstood and underutilized company’s asset. Staffs have the opportunity to be up-skilled, resulting into an improvement in their performance. With a training and development program, based on the internal strategies of an organization, employees are more in line with the overall business objectives and ensuring optimum productivity.
A higher level of motivation will have a positive impact on the performance of employees. The emphasis should be placed on the core skills of employees and management to empower them. This will result in a more motivated and confident workforce. One way to successfully empower employees is through effective communication and training. This is where effective leadership skills is a crucial success factor. Leaders must practice effective communication, create procedure standards, determine a hierarchy of importance and empower the workforce. Defining the Supply Chain goals clearly and concisely will allow employees and the management to take advantage of existing and future opportunities for improvement.
Supply Chain Training and New technology
Training employees to handle new technologies makes the training and development program more efficient. With the influx of millennials, the emergence of technology has created a large impact on the corporate world. Technology has drastically changed the way companies manage their supply chains. Not only does technology help companies improve transparency of the distribution network through social media but it also provides additional control over the freight management strategies and improves efficiency.
In 2014, 100-plus thought leaders and partners that participated in the US Roadmap for Material Handling and Logistic survey predicted that traditional Supply Chain models will undergo dramatic transformational change due to technological innovation and changes in customer demand between 2015 and 2025. Technology is giving businesses the ability to boost communication and coordination of purchases. If applied efficiently, it has the capacity to increase revenue and significantly reduce costs. Companies have already gone a long way as far as implementing new technologies is concerned but there is more to go. Emerging technologies such as 3D printing, drones predictive analytics, robotics and automation, cloud computing and storage are going to cause a great impact on supply chains too.
Supply Chain Training leads to cost reduction
Improving, streamlining and optimizing the supply chain can lead to cost reduction. A good training and development program can lead to a significant cost reduction in terms of managing inventory, transportation, storage costs etc… A training program help employees to be more engaged and productive. A survey conducted by PwC in 2014 revealed that businesses with optimal Supply Chains have 15% lower Supply Chain costs, less than 50% of the inventory holdings and cash-to-cash cycles at least three times faster than those not focused on Supply Chain optimization.
Investigating the cost of serving customers is one way to understand how Supply Chain costs affect business success. There is fine line between appropriate and excessive supply chain cost-cutting. While training, the main focus should be stressed on the importance of trimming away processes and activities which add no value. Some areas which staffs need to look closely to eliminate poorly managed supply chain expenditure are excessive transportation costs, procurement costs, inventory and storage costs and poor forecast accuracy. If employees are properly trained about these factors, the supply chain is likely to function with much success rate.
Ensure Customer Satisfaction through supply chain training
Customer service and most importantly customer satisfaction are among the most important factors which determine revenue growth in a business. The customer should be the primary focus when considering a supply chain strategy, network design and performance management. Proper training should be provided to employees so that they can maintain a good relationship with customers.
A research by Gartner in 2014 found that by 2016, 89% of companies expected to be competing primarily on the basis of customer service. Companies usually face supply chain issues which have an adverse effect on customer satisfaction. Problems such as delays in response to customer service, inventory shortages, and slow time to market new products, poor product or service quality can highly impact the supply chain to a large extent. Training and development is a good way to solve such issues which enhance customer satisfaction and lead to a more successful supply chain.
Effective supply chain training can significantly improve the bottom line of an organization by reducing cost, implementing new technology, encouraging employee engagement and ensuring customer satisfaction. Such a strong supply chain is a source of competitive advantage where employees are able to perform at optimal effectiveness, leading to higher operational margins.