Page 22 - Logistics News - March_April 2023

SUPPLY CHAIN

5 tips on how to deal with unpredictable

supply chain lead times

By Jan Tukker, Principal at BusinessChain

Supply chains have felt the effects of COVID-19, shipping escalations, erratic supply and the war
in Ukraine. For supply chain planners, it’s an impossible task to forecast a smooth flow of goods.
There are, however, some approaches that can minimise the impact of this volatility.

etting the balance right between too much 3. Win-win
inventory and being out of stock is a challenge. Supply chains are all about relationships. If your organisation
G Each industry has specific dependencies that need has a transactional approach to dealing with suppliers, you
to be carefully considered. For example, the oil industry is are likely to gain a short-term cost advantage, but unlikely to
traditionally quite volatile, but add in currency fluctuations have support from those suppliers when things get bumpy.
on top of the Ukraine war, and the supply of this precious
commodity is made significantly more difficult to manage. 4. Consistency
Unfortunately, politics impacts supply chains, forcing Supply chains thrive on a smooth, consistent flow of
businesses to make excessive buying decisions that they products to customers. Erratic processes will lead to out of
would not normally make.To mitigate against volatile lead stocks and too much stock. Drive for consistency even if the
times, consider the following pointers. lead times are slightly slower than you’d want.

1. Measure your supplier’s lead time performance and 5. E-commerce fulfilment reliability
react to the data In the super quick ‘I want it now’ shopping world, lead time
Volatility has a habit of making planners overreact, buffering really is king. Measuring and managing last-mile lead time
too much resulting in overstock positions. The worst lead and promising your customers a delivery day that is very
time is often used in the planning cycle. The inventory likely to occur will keep you in the game. Couriers whose
holding costs of this approach are high, often created by how operational capabilities are not carefully managed will likely
planners are measured. Stock holding costs should be one of have your customers feel the effects of unreliable deliveries.
the metrics for which planners are held accountable. Using When selecting a courier (or courier platform), make sure
statistics to create the required planning lead time based you ask to see their standard operating procedures (SOPs). If
on data and confidence levels is far superior to emotively they don’t have SOPs, they are likely to let you down.
plugging in a ‘fat’ lead time.
Final considerations
2. Understand your suppliers’ capabilities The use of artificial intelligence (AI) across supply chains is
Having a comprehensive understanding of your key making a real difference. With so many stock-keeping units
suppliers’ production capabilities, risks and performance (SKUs) to manage, people and the systems they use are
is critical to understanding how to react to supply chain unable to effectively get to each planning element without
disruptions. Have a formal supplier capability programme to the use of some form of AI.
help make better strategic procurement decisions.
An integrated supply chain, driven by customer
buying behaviour and demand, acknowledging each node’s
capabilities is the ultimate goal. There is no use in optimising
L O GI S T I CS NEWS when collaborating and adopt a continuous improvement
one node.

Listen to the data, acknowledge the people element

mindset. •

20 M A RC H/A P R IL 2023 www .l o g ist i csn e w s .c o .z a