Guest Post

5 Supply Chain Management Myths and the Truth Behind Them

November 8, 2021

This guest post was written by Emma Pogg. Emma is a supply chain expert who has the uncanny ability to work with clients, vendors, and trade partners to help them meet their needs. Emma is passionate about finding efficiencies in the supply chain process through her knowledge of how materials are used and distributed across an organization.

Like any other industry, supply chain management comes with its own myths and misconceptions that can easily mislead many businesses. This is especially true when people try to seek out the best way to optimize their supply chains – only to actually be slowly sabotaging them and making them more inefficient than they should be when they fail to do ample research.

Here, we break down some of those myths that you should watch out for and avoid.

Myth #1: Automation is always a better idea over humans.

Despite technology having massive strides over the past years and more businesses and households slowly moving towards automation, it is still very much untrue that handing over a facility to automatic robots is a good idea today.

If there’s one thing right now that automation has over humans, it’s efficiency. With the write programming and proper build, robots can create and build products at a faster rate than any single human ever could – all without asking for a paycheck in the end. They can move fast and do the same menial and boring tasks over and over again without ever complaining.

But here’s one thing that robots are very bad at doing: Adapting.

As mentioned earlier, automated facilities are very good at doing the same thing they were programmed to do over and over again, but if an order becomes too complex or possibly even require some flexibility in terms of thinking, any automated facility is sure to fail in this regard. This is more apparent in a facility where troubleshooting and flexibility is required.

Even worse? If one thing breaks, it’s likely that the entire production line will have to be stalled. And if something so much has to change, no matter how small, you’ll have to reprogram every single robot in the facility to account for that miniscule change.

Technology is certainly ramping up, and it’s not hard to see why so many people find it appealing for their supply chains, especially with improved logistics and warehouse operations as is the case with Microsoft’s warehouses. However, we are not at the point where technology can fully surpass humans in all aspects yet.

Myth #2: Efficiency means cutting costs as much as possible.

It seems that most people have this misconception that the cheaper you get with your supply chains, the more efficient it becomes and the more money you save as a result.

This couldn’t be further from the truth. Have you ever heard of the phrase “You get what you pay for?”

Well surprise, surprise. This applies in business and supply chains as well.

It’s true that you shouldn’t have to spend your entire life’s savings to optimize your supply chain, but you shouldn’t turn into a cheapskate either. It’s just as bad and simply leads to more problems in the bottom line when you won’t even try to bring in newer tech into the field because of expenses.

Cutting costs as much as possible will only serve you in the short-term, you’ll save more now, but when push comes to shove and machinery and vehicles start failing, you’ll find out the hard way just how much you have to actually shell out to fix these problems in the long term.

Myth #3: You can get every bit of information you need simply from looking at the data.

Data is an important factor when it comes to supply chains. It’s how you are able to understand the inner workings of your own supply chains as well as your products and how people receive it, for instance.

The problem is that data on its own will not be able to tell the entire story. It can only simply present the facts.

What does this mean? As an example, imagine a shipment of shoes that was supposed to be delivered in a week was delayed to two weeks. If you simply take that data as is, the only thing you know is that the shoes were delayed. That’s insane! Why would it need an extra week to be delivered?

Then you find out that there was a massive hurricane that tore up the seas on the week it was supposed to be delivered. No ship captain in their right mind would risk their cargo, their ship, or even their lives delivering these shoes just to make it on time.

See what I mean? Data on its own tells an incomplete story, you need to look beyond and pay attention to the context. Failure in doing so can even lead to misinformation on your data, which you’d think would be impossible when data only talks about facts!

Myth #4: Forecasts and predictions should always be 100% accurate.

In any market, you need to prepare and predict customer activity, such as when sales will be high on your end, and when they will be low. This will help you in achieving the sweet spot of having just the right amount of supplies for customer demand.

The problem, however, is that most would expend as much energy and resources as possible to achieve the “perfect” forecast and leave little to no room for error.

This is an impossible task. Simply put, patterns may arise in markets over time, but it is never a constant nor is it stable. Markets are always volatile, and everything can change even in a single day because it depends on the trends and how people react to them. Combine that with shortened product life cycles and customer fulfillment models that grow more complex over the day, and you’ll quickly realize that expending so much effort in perfecting your predictions will have massively diminishing returns.

What you should do instead is to account for the risks. As there is no perfect plan (and there never will be), the second-best thing you can do is to find a way to mitigate as much risk on your business as possible.

Myth #5: The business strategy that the big companies are using will also work for me.

Not necessarily. This isn’t to say that you should ignore their strategies — they got big for a reason after all.

However, you can’t just copy their business strategy and expect the customers to come flying in. You need to understand what your customers want and are expecting from you.

Do they consider “product customization” a perk for your curtains company? Then perhaps “made-to-measure” would help propel your business.

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