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09/12/2022

How communication governs supply chain efficiency

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The right communication strategy prevents supply chain breakage.

Supply chains are fragile.

If you don’t address potential logjams or delays, your supply chain can break, causing massive problems for your business and your customers.

So how do you stop a supply chain from breaking? Beyond the fleets of vehicles, the warehouses and the schedules, it’s important to start thinking about a critical element of the supply chain that often goes overlooked. Communication.

Communication is at the core of every supply chain. It is paramount to growing efficiency with both your employees and external partners. That’s why it’s vital to talk about the importance of communication, and why rethinking your approach can fundamentally transform supply chain operations across your organization.

The effect of poor communication on efficiency
Poor communication is one of the biggest roadblocks to an efficient supply chain. Without the channels to facilitate strong communication, issues can’t be raised quickly enough, leading to a waste of products and materials in addition to a build-up of backlogs.

Ultimately, this means demand isn’t being met. But there is a large push to adopt systems that foster stronger communication.

The COVID-19 pandemic forced many industries to rapidly upgrade their communication solutions to maintain pre-pandemic levels of efficiency.

Businesses that made the leap to newer, more integrated systems found themselves to be 20 percent more efficient, putting them head and shoulders above the competition.

Communication allows for better problem solving
Logjams in supply chain logistics wreak havoc on all parties involved. Delays can mean a drop in profits and extra costs incurred from wasted materials, understocked or overstocked products, storage fees and demurrage fees for late delivery.

Problems from delays are so common that one in three organizations face $1 million or more per year in losses.

Longstanding problems like these require long-term solutions. Using new technology is the best way to guard against unforeseen market circumstances that can compromise the efficiency of your supply chain.

Technology that makes data readily available is crucial in flagging potential issues to manufacturers and suppliers before situations escalate. Firms can increase transparency through advanced EDI and API systems that keep suppliers and retailers in the know while expediting the ordering process.

Data strengthens proactivity
For the logistics sector in a supply chain, it’s essential to work proactively, as working reactively can leave you playing catch-up with your competitors. Improving communication improves your proactivity by increasing overall access to data and helping to identify problems faster. 

Today, increasing demand for drop ship orders – in conjunction with a lack of delivery drivers and logistics personnel – means that even more strain is being placed on supply chains, making that proactivity more difficult to achieve. But there are actions you can take to minimize disruptions when something unexpected happens.

To prepare for surges in demand or supply chain disruptions, businesses should create a contingency strategy that’s nimble enough to scale to demand. This is where durable relationships with suppliers and partners play a pivotal role in making sure data is shared effectively and KPI’s can be scaled and met.

A rejuvenated customer experience
As you expand service to your vendors and retailers, improved technology is essential. Logistics companies need to meet the demands of both suppliers and retailers, so using software that can track inventory and promptly report any disruption can improve your business' on-time delivery.

Data from comprehensive tracking systems also boosts transparency and trustworthiness as it allows critical data to be shared to internal and external teams. Delivery information can be shared with supply chain employees quickly to tackle potential bottlenecks.

The data from upgraded tracking systems can also boost the efficiency of supply chain logistics personnel and distributors. Data is used to provide suppliers and retailers with real-time tracking and delivery information at the touch of a button, keeping them in the loop at every stage.

A centralized, cloud-based data store makes it possible to achieve real-time communication and inventory management, both of which can dramatically increase your efficiency.

Growing the scope of information
Rising to meet new tech needs can be complex, especially for growing businesses, but improving communication doesn’t have to mean a complete overhaul of your company’s technical infrastructure. 

Setting realistic goals and understanding each other’s management strategies don’t require extra tech and can help complications get dealt with quickly. Better communication also helps align goals between partners. This way, supply chains can be nimbler, adjusting output to quickly match demand.

You don’t need state-of-the-art systems to improve your communication, but it does help to have a cloud-based solution. For most companies, this is already the case, but those that aren’t moving towards digital methods risk future challenges that might not be readily apparent.

Taking care of your team
Taking care of your staff is paramount to business success. This is especially the case amid global supply chain issues like overworked delivery drivers, inflation of goods and resources, and shipping logjams.

A lack of transparency along a supply chain increases the chance of employee stress. Weak communication throughout the supply chain lowers productivity and morale by 30 percent and is often cited as the biggest reason for low team morale

Moving away from paper trail tracking and towards EDI or automated messaging systems means manufacturing and logistics firms can minimize stress and confusion by making targets and deadlines clear. And with the additional data available, retailers and warehouse workers can staff appropriately, guaranteeing that there’s always enough staff to handle shipments and leading to a more amicable work atmosphere.

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