In the past few weeks I have been talking to people about Warehouse Management and Supply Chain and they all seem to flinch at the word “Supply Chain”. I thought it would be beneficial if instead of talking about the components of a supply chain, we talk about it as a whole entity and then I can tell you why it is one of my favorite subjects!
Before we start looking at Supply Chain, let’s first define the Value Chain.
What is a Supply Chain?
A supply chain then is an overall look at the various stages coming together as a whole. From planning, sourcing raw materials, to the production of the finished good to the final delivery to the customer’s hands. Your business is essentially a supply chain.
It is no wonder why a small improvement in your supply chain can yield tens to hundreds of thousands of dollars in recovered revenue.
From a systems standpoint this can include some or all of: a manufacturing system, a warehouse management system (WMS), a transportation system, and an Enterprise Resource Planning System (ERP) to encompass them all.
Supply Chain vs. Business Development
For a business to grow, it needs to increase sales, right? True, but it also has to operate more efficiently or that increase in sales is lost to the weight of the operations.
Growth is actually a multi-pronged approach. If your goal is to double your sales, you will have to expand your warehouse, hire more staff, integrate systems that can handle the volume of transactions, and re-negotiate your purchasing and shipping contracts to make the best use of the increased revenue.
In economic terms, you need to keep reducing the variable costs to increase the margins. (ex. Cost Volume Profit Analysis at Vanderbilt: http://www2.owen.vanderbilt.edu/Germain.Boer/mgt413/cvp/cvp.html)
To increase sales that dramatically, you will need to expand into new territory, expand your product line, find a new vertical, or convert more customers from competitors. However, you can decrease margins faster by optimizing your supply chain.
Why I Love the Supply Chain
There are few areas in a business where slight changes can make such a large impact on a company’s bottom line. A small investment to optimize the returns process can easily save tens of thousands of dollars a year.
Companies spend small fortunes in labor each year, sometimes each month, doing full inventory counts. Often closing operations for days at a time unable to make sales.
Implementing a Warehouse Management System that increases inventory accuracy and allows the company to perform regular inventory adjustments can save in the hundreds of thousands of dollars in overtime and lost sales.
You can boost sales by increasing marketing, but you can also boost sales by not being closed when the customer calls.
MSA Systems primary role is with the Warehouse Management System, but our focus is optimizing the WMS within the entire supply chain. Reducing errors increases customer service because you can’t ship what you can’t find and your customer won’t pay you for what they never received.
How much profit can you bring your business with a quick phone call? Call us at (408) 252-9000 today and see how we can make next year your most profitable yet!