The lifecycle of a seller’s products can a complicated one – from product development to manufacturing to ultimately getting your product in a customer’s hands. There are numerous intricate steps and partners have to work in concert to get them done efficiently and cost effectively.
Bottlenecks in your supply chain can create waves and can have devastating effectives on the health of your business. A few common contributing factors to bottlenecks include: poor storage methods, poorly developed operating processes, undefined inventory norms, limited resource networks, inefficient manpower, lack of supply chain transparency, and gaps between demand and supply. Engaging a third-party logistics (3PL) provider can assist in eliminating these types of inefficiencies, while also saving the period of time it takes for the production process, energy, and costs caused by bottlenecks.
The identification and management of these supply chain issues require industry expertise as well as a considerable amount of time to read, interpret, and implement more efficient processes. This can be a challenging distraction from your core business operations. There are five key ways to overcome supply chain bottleneck issues:
Understanding Supply Chain Bottlenecks and Their Definition
A critical part of managing a successful supply chain is identifying and understanding bottlenecks. But what exactly is a supply chain bottleneck? In simple terms, a bottleneck occurs when one part of the supply chain process slows down the entire production line.
This slowdown can impact the manufacturing process, limit the capacity utilization, and reduce the overall efficiency of the supply chain. Common causes include resource shortages, labor issues, and unexpected downtime in production. By understanding the root causes and definition of bottlenecks, supply chain managers and 3PL providers can take proactive measures to prevent interruptions.
1. Identify Your Bottlenecks
Every supply chain is unique. They can be differentiated in terms of product flow or operation type, and require varying adjustments to correct them if issues arise. Undefined bottlenecks are likely to lead to unnecessary hurdles that waste lead time, energy, and costs. Therefore, logistics and supply chain managers need to analyze their supply chain management and determine potential bottlenecks.
Proactive supply chain professionals know that well-established third-party logistics providers have years of expertise in assisting businesses identifying any potential bottlenecks. Their industry experience enables them to proactively plan, prevent or navigate around the issues to ensure smooth supply chain operations are maintained.
With the advancements in supply chain technology (see below), it’s far easier to identify, understand, and quickly resolve these issues. It’s important you centralize your supply chain data so you have wholistic view on what’s going on so you can react quickly without having to rely on multiple sources.
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2. Read and Interpret the Data
There are multiple methods to identify and deal with manufacturing bottlenecks. However, given each supply chain is different, the most strategic way to identify potential bottlenecks is to learn from your own past supply chain history and data. Your business data should be able to point to various bottlenecks, and maybe even a few attempted solutions too.
Over the last decade, supply chain data has become more readily accessible. From tracking cargo movements from the country of origin to residential package deliveries, sellers who can quickly ingest and interpret the data can save a considerable amount of money and gain a competitive edge.
An experienced third-party logistics provider will be able to assist you by analyzing your data and identifying what is relevant and how your processes need to be modified. Even in the absence of such data, third-party logistics providers can assist by using their industry expertise to help you overcome bottlenecks and ensure your supply chain runs smoothly.
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3. Outsource to Reliable and Experienced 3PL Partners
Effective end-to-end supply chain management requires expertise, vast resource networks, IT infrastructure and competent management. Lack of these resources is likely to create an inefficient supply chain. One way to overcome this is to engage a reliable and experienced third-party logistics provider. 3PLs are readily equipped with all these resources, years of experience and best in class knowledge so they can manage bottlenecks and allow you to focus on your main business objectives.
As consumer demands change faster than ever before, it’s critical to find a 3PL who can adapt to their needs. A 3PL that can manage a variety of fulfillment channels (aka omni-channel fulfillment), including direct-to-consumer fulfillment (DTC), retail fulfillment (B2R), drop-shipping, and business-to-business fulfillment (B2B) are well suiting for sellers who need to diversify their sales channels.
In addition to helping you adapt to the ever-changing market, a well established 3PL can provide significant cost savings. From passing along deep discounts for small parcel shipments to eliminating the dreaded retail chargeback, 3PLs can help bolster your bottleline. Identifying areas of cost savings is an ongoing exercise ongoing exercise for both the seller and their 3PL partner.
4. Develop a Robust Plan
Unplanned, random actions or reactions to bottleneck situations may lead to short-term fixes but may have a huge negative impact on your supply chain operation in the long-term. To ensure that the impact of every action is well-thought-out before implementing it, bottlenecks need to be proactively identified, and all available options need to be discussed before finalizing one or more solutions. Third-party logistics (3PL) providers can be of great assistance as they bring experience and expertise that will inform both short and long-term impact on your supply chain. Engaging an experienced third-party logistics provider can assist you in developing a steady and robust plan to manage the bottlenecks efficiently.
At the peak of the COVID pandemic, sellers’ supply chains were put to the test as demand for certain product categories exploded and others decreased drastically. Sellers and 3PLs who were able to adapt quickly were able to capitalize financially or on the flip side, cuts costs immediately for products that saw a drastic decrease in demand.
Additionally, experienced sellers should vet multiple partner for every critical step of the supply chain to mitigate their risk. In the event one partner stumbles, the next in line can pick up the slack to minimize any disruption. For example, some small parcel carriers struggled during the pandemic and the sellers who could easily pivot from one carrier to another benefited from a better overall customer experience.
5. Build a Transparent and Flexible Supply Chain
A transparent supply chain means you can see each new product through all stages, including production processes, manufacturing processes in real-time. Any data and information you need to make sound business decisions, plus proper document flow, and inventory and fulfillment flow should be available in real-time as well. Over the last decade, there has been an explosion in supply chain technology companies that have made supply chain data more readily available and cheaper to acquire.
With this transparency you will be better able to identify bottlenecks as well as their root cause. Blockage inflow can be easily identified in a transparent supply chain and proactive choices can be made rather than reactive and allows for continuous improvement.
However, not all bottlenecks can be identified beforehand. Some bottlenecks arise suddenly and must be handled after they surface. A transparent and flexible supply chain ensures it’s easy to quickly identify these bottlenecks to be handled with minimum impact. For example, during peak holiday seasons, sellers who could quickly adapt to unplanned customer demand, including changing small parcel services on the fly or activating another manufacturer to increase supply, can increase profits and customer satisfaction.
Expert third-party logistics providers assist in building these transparent and flexible supply chain processes by deploying systems, processes, reporting, analytics, experience and expertise.
Just-in-Time (JIT) and Lean Manufacturing Practices in 3PL Logistics
Many businesses today use just-in-time (JIT) and lean manufacturing principles to streamline their supply chain processes and reduce excess inventory. In JIT systems, raw materials and new products are ordered and delivered exactly when they’re needed, minimizing waste and reducing holding costs.
However, any disruptions in the supply chain, such as supply chain bottlenecks or production bottlenecks, can lead to downtime and impact the bottom line. With the support of a reliable 3PL provider, businesses can manage these risks and build resilience into their JIT supply chain.
How 3PLs Address Supply Chain Risk and Enhance Flexibility
Supply chain risk management is essential for businesses today, especially given the global nature of most supply chains. Risks can stem from a variety of sources, including market fluctuations, natural disasters, and supplier issues. By partnering with experienced 3PL logistics providers, companies can build a more flexible supply chain that is better equipped to adapt to changes.
3PLs offer solutions to mitigate risk, like diversified supplier networks, alternative transportation options, and contingency planning to reduce the impact of unexpected supply chain disruptions.
Benefits of Continuous Improvement in the Supply Chain Process
Continuous improvement is a core principle of effective supply chain management. By regularly assessing and refining their processes, companies can better address production bottlenecks, manage workloads, and optimize their supply chain process. 3PL providers often implement continuous improvement strategies within their operations, using tools like the
Theory of Constraints and other lean methodologies to identify and address inefficiencies. This ongoing optimization not only saves costs but also enhances customer satisfaction by ensuring that products reach the market faster and more reliably.
Bottom Line
In a supply chain, bottlenecks are likely to weaken your operations and create a demand for you to spend more lead time, attention and energy trying to resolve them. Timely identification and proactively dealing with these bottlenecks can assist the flow and improve the overall supply chain. Innovative third-party logistics providers can help you identify bottlenecks. Additionally, they can provide management skills and advanced planning processes to help you avoid them should they arise.
If you’re looking for help managing your supply chain and logistics, send us a note to connect about how we can help your company grow. You can read DCL’s list of services to learn more, or check out the many companies we work with to ensure great logistics support.
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