3 Typical Supply Chain Struggles for SMEs
Managing supply chains is never an easy task for the smaller enterprise. There are just so many elements that are (or appear to be) outside of your company’s direct control.
Your success depends on the performance of every partner involved in the supply chain, some of which will be SMEs like your own, dealing with the same small-business struggles, while others will be larger enterprises with which your company can never seem to exercise any influence.
The position of the SME within the supply chain can often be an unenviable one, with the following three aspects being particularly challenging to master. Indeed, if your company is struggling with any of the issues below, you can be assured that many of your peers are dealing with similar difficulties.
1: Freight and Transportation Management
If your company can maintain an internal transportation operation, replete with the necessary assets and human resources to meet its freight needs, it is probably in the minority today. Indeed, if you are like many SMEs that operate in global markets, such an operation is undoubtedly out of the question.
At the same time, smaller businesses typically find it challenging to manage freight and transportation costs, service, and performance when working with external logistics providers.
Common mistakes in this area include:
- Working with too few or too many freight companies
- Choosing the wrong types of transport services
- Inadequate performance measurements
- Insufficient management and organisation of systems and processes
Your company cannot afford to make any of the mistakes above. After all, the control of freight costs for companies that lack volume and scale is challenging enough.
Even the most well-managed transport operations generate costs of between five and ten percent of sales for the average SME. Furthermore, mistakes in freight and transport management can quickly translate into lost sales and customer attrition, hence eroding your company’s profits even further.
2: Customer Service
While transport and freight issues can affect levels, it’s not the only element of supply chain management to do so. Customer experience management as a whole is another area in which SMEs sometimes get into trouble.
We find that our work with smaller businesses tends to involve the resolution of a range of problems, some of which we repeatedly see across most customer-service related projects.
The most common of all are as follows:
- The management team does not know how to develop a formalised customer service policy.
- Where policies are in place, they often include unrealistic and inappropriate goals.
- Policy development takes place without a real understanding of what customers want or expect.
- Policies are developed, but designed in a way that affects the business negatively.
- Appropriate measurements are not in place to drive customer service performance.
Of course, the number of customer complaints received imputes the impact of the above mistakes. Over and above the direct effect on satisfaction though, a poorly developed customer service policy also increases operational costs, because it will typically lead to the expediting of orders and excessive rework for your logistics team.
3: Logistics Outsourcing
As an approach to combating many of the issues above, many SMEs choose to outsource their entire logistics function—a strategy that makes sense and can be extremely worthwhile if well executed.
However, here too, some companies run into problems and find it hard to achieve the expected outcomes. When businesses struggle with logistics outsourcing, it is often because…
- Contracts are not well balanced and hence disadvantage either the 3PL or the client
- The client company has not adequately specified the requirements or provided enough detail
- The wrong approach is taken to calculate and agree on contractual freight rates
- The client fails to measure and manage 3PL performance effectively
- The selection process has been rushed and implemented without sufficient consideration
These mistakes can be especially detrimental to the company that chooses to outsource logistics, as instead of improving service and performance, they can result in service failures, higher costs, and perhaps even harm the relationship between client and 3PL, ultimately leading to a costly decision to switch providers or bring some logistics processes back in-house.
You Don’t Need to Struggle With Your Supply Chain
Your small or medium-sized enterprise might not have the luxury of an in-house team of logistics experts to help you avoid difficulties with freight and transport management, customer service, or outsourcing initiatives, but that does not mean you need to continue struggling with those elements of your supply chain.
At Dawson consulting, those issues that may seem insurmountable are nothing new to our team. Indeed, solving them is what we do—and we do it day-in, day-out.
If your business is struggling with any of the issues discussed above, we will be delighted to work with you and simplify your supply chain operation. To find out more about how we can help you, fill in our quick and easy contact form, and a member of our team will get back to you with the answers you need.