The Importance of Communication in Supply Chain Management

Someone recently told me about a horrible experience they had with a supplier. They had ordered a large number of items to be put in a large container and shipped across the ocean from China.

Communication is an important part of having a healthy supply chain, QuickBooks Manufacturing BlogHowever, the supplier discovered that all of the items wouldn’t fit in the container they had agreed upon. Instead of alerting their customer to this problem, they simply indiscriminately removed a large number of products and did not ship them at all without giving any warning of what they had done.

Fast forward a little while and when the container was finally delivered to the customer, they discovered that many badly needed supplies were missing. This meant that they had to disappoint their own customers who had been waiting for them.

This bad situation could have been resolved before it ballooned into a major problem if the supplier had just called, texted, or emailed their client. If there was no way to get another container, the customer could have at least worked with the supplier to prioritize the most important items they needed to get as soon as possible.

Communication Is Key

The need for communication in supply chain management cannot be overstated. If a shipment is delayed, unfulfilled, or otherwise disrupted, it’s up to the supplier to inform the company they are supposed to ship to that there is a problem. This might be painful at first and it could even cost a customer or two because of their disappointment. But over time, this kind of honesty and communication builds credibility and trust.

If a supplier spends more time worrying about getting blamed for delays than they do solving the problems that cause those delays, they’re more likely to keep upsetting customers and making customers wary of doing business with them.

But if a supplier keeps their customers in the loop about their processes, they can work together to come up with a solution when something unexpected comes up. Admitting mistakes is never easy. In fact, it can be quite painful. But there’s no other way to enjoy long-term success.

Monitoring Suppliers’ Performance

You can use inventory tracking software to monitor your relationships with each of your suppliers. If you notice a pattern of late shipments, unfulfilled orders, or short items, you can give those suppliers warnings or find new suppliers, if they don’t change their ways.

Relationships are important when doing business. Your customers need to trust you in order to want to buy your products or services, and you must trust your suppliers in order to continue getting parts and products from them. If there are weak links in your supply chains, you can work to fix them with or without your suppliers’ help, but it’s better if you can work together in a mutually beneficial way.

Open communication facilitates relationship building. Keep the channels of communication open between you and your customers and suppliers so that you can prevent misunderstandings and disappointments from creeping in.

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Engaging Your Employees Might Just Save Your Business

Companies don’t need to wait for a stimulus from the government to pull this country out of the economic doldrums. They have plenty of untapped power hidden within them that they could use to raise themselves up if they only knew how to unlock it.

Engaging your employees can yield hugely positive results for your business, QuickBooks Manufacturing BlogWhat is this untapped power? Unengaged employees.

According to a 2013 Gallup poll, the U.S. economy could be generating $450 billion to $550 billion more every year if its workers were all engaged and fully committed to their jobs.

What keeps employees from being engaged? It can be many things:

  • Poor managers
  • Overly negative corporate culture
  • A lack of focus on employees’ positive contributions
  • Excessive hours required on the job

Seventy percent of American employees are unengaged at work, according to Gallup. If we could get that number close to zero, employees and businesses would likely enjoy lower healthcare costs, better overall health and wellbeing, fewer absences and injuries, less job turnover, and higher productivity.

We could go from tepid to explosive growth if employees were fully engaged and motivated to do their best at work. You can’t control what other businesses do, but you can control what you do in your own business.

If you want to rise above the competition, unlock your workers’ hidden talents by:

  • Choosing managers by their abilities instead of seniority
  • Offering positive reinforcement of good behavior rather than just punishing bad behavior
  • Showing employees you appreciate what they do
  • Being flexible with employees’ schedules

Don’t wait for the economy to improve. Make it happen by changing the way you do business.

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10 Game-Changing Manufacturing Tactics

Manufacturers can bring their business practices to a whole new level with manufacturing inventory software. Here are 10 game-changing manufacturing tactics you can use with the right software:

Manufacturing game changers, QuickBooks Manufacturing Blog1. Automatically track shipments and send customers emails with the estimated time of arrival for their packages

2. Monitor production processes to find areas for improvement, such as wasted materials and slowdowns

3. Update inventory numbers in real time so you always know what you have in stock

4. Map out your warehouses(s) so you know exactly where each part and product is, down to the shelf and bin

5. Use handheld devices to scan inventory in and out of your warehouse, helping you avoid data-entry errors

6. Know the condition of your products at each stage of the production process

7. Standardize your receiving, ordering, picking, packing, and shipping operations to increase efficiency and effectiveness of employees

8. Integrate your inventory and accounting software to eliminate double data entry and make sure your records all match up

9. Set up automatic reorder points on all of your parts and products to keep them from running out

10. Use multilevel work orders and bills of materials on jobs that require several steps to complete

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Achieving Green Inventory Management

A business that makes the best use of its resources is saving a lot more than just money. There are only so many resources to go around, so it’s a good idea to have as much efficiency as possible to prevent waste. That’s what wise stewards do.

Achieve green inventory management for a healthier business, QuickBooks Manufacturing BlogWhat can you do to achieve green inventory management? Here are a few ideas:

  • Use inventory tracking software to automate ordering and receiving processes
  • Train as many of your employees as possible on how to use inventory-related hardware and software so they can help keep the business running smoothly
  • Use a Just in Time (JIT) model to get just the right amount of parts and materials in stock when you need them
  • Study your customers’ buying trends to plan for surges and declines in sales so you don’t keep a huge safety stock all the time
  • Work with local vendors to reduce wait times for new orders to arrive
  • Make the best use of your warehouse space by putting popular items close to the receiving door and grouping similar items together

This is by no means a comprehensive list. There are plenty of other things you can do to improve your company’s efficiency and save money and resources. But these serve as a good starting point.

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5 Inventions That Could Radically Change the Way Companies Manage Inventory

New technology is both useful and disruptive. As companies struggle to adapt to an ever-changing environment of one innovation after another, they should prepare for things that could have a huge impact on how they do business.

How will new technology affect inventory management? QuickBooks Manufacturing BlogHere are five inventions that could radically change the way companies manage their inventory.

1. Smartphones/Tablets

The world is going mobile. Instead of expecting an accountant or warehouse manager to sit at a computer and crunch numbers, businesses are starting to free them up to walk through a warehouse and check inventory counts, correct errors, and reorder items with a smartphone or tablet.

If each employee could use their own personal device to do inventory management tasks, that could also save the company money and save the workers time they would otherwise have to spend getting used to new hardware. This may present some data-security issues, but I’m sure they’ll get worked out.

2. 3D Printing

Imagine paying $50 for a prosthetic limb instead of $40,000. Or building an entire house without contracting the job out to a huge team of workers. What if you could manufacture replacement parts for your vehicle rather than going to a shop and waiting for deliveries to come in?

We’re just scratching the surface of what is possible with 3D printing technology. Brand-new organs created from someone’s cells could eliminate the need for donors, and printed food could be quicker and more cost-effective than growing it. How many lives could these save if they ever became practical?

And all of this would seriously change the way companies operate. Doctors, pharmaceutical companies, construction companies, repair shops, and many other businesses would have to rethink their roles in consumers’ affairs. They would likely become more advisers than providers, lending their expertise on implementation rather than production.

3. Google Glass

Google Glass, or something like it, could eventually turn into a hands-free barcode scanner. Imagine verbally asking for inventory counts on products you’re looking at and seeing real-time stats pop up to the side of your vision. Speed and accuracy without worrying about dropping expensive hardware – that sounds like a giant leap forward in warehouse management.

4. Drones

I talked about this extensively in another blog post. If deliveries could be made via drone rather than plane and truck, this could completely change the way companies handle supply chains, warehouses, and other aspects of their business.

Customers would learn to expect packages in hours or even minutes instead of days. This would speed everything up, forcing companies to automate many processes. It would be virtually impossible to keep managing inventory the old-fashioned way if drones became the main way to ship products to customers. Greater efficiency would be the name of the game.

5. Car Sharing

While not technically the invention of a new product, car sharing is a twist on the old concept of car ownership. Rather than purchasing a vehicle and maintaining it, some people prefer the flexibility of simply borrowing a car when and where they need it and then returning it when they’re done.

There are three main types of car sharing: Peer to Peer (individuals rent their cars out), B2C (companies rent their cars out), and Co-op (cities or other local organizations rent cars out). In all of these cases it is quite a logistical challenge to keep track of all of these vehicles and get the right vehicle into each customer’s hands exactly when they need it.

For rent-a-car companies, this is a significant change to how they’ve done business in the past. The idea continues to catch on in many countries, so it looks like companies with fleets of cars to rent out will need to keep upping their game.

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Essential Supply Chain Management Tip: Know Your Customers

The whole point of managing supply chains is to make sure your customers’ needs are taken care of. You want to have the right parts and products on hand when your customers are ready to buy them. That’s how your business can enjoy steady growth and health.

Know your customers to manage inventory efficiently, QuickBooks Manufacturing BlogBut every business is different and their target customers don’t have the same buying habits. So it stands to reason that there’s no one-size-fits-all approach to supply chain management.

For example, if you’re a manufacturer who mostly supplies government contractors or large organizations with pipes, metals, textiles, etc. you probably don’t need to keep a huge amount of inventory in stock. You can get away with having longer wait times.

But if you supply consumer products to retailers, you probably don’t have the luxury of long lead times and you need to make sure your customers stay well-stocked. Thus, you need to keep more raw materials in your warehouses or other facilities so you can act quickly when orders come in.

Your customers’ needs affect your storage space, the number of items on your shelves, your reordering practices, and many other parts of your business.

As long as you know your customers, you can stay on top of your inventory and achieve the end results you want: happy customers, operational efficiency, and conserved resources.

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Disruptive Inventory Management Technology Is Coming

All around us we keep hearing about disruptive technologies being developed. These are game changers that interrupt business as usual and force people and companies to adapt to a new environment.

What new disruptive technology is coming to inventory management? QuickBooks Manufacturing BlogFor example, there are driverless cars being tested in Japan that could seriously change the revenue sources as well as the long-held policies of insurance companies, police forces, public utilities, and parking lots, just to name a few.

And then there’s 3D printing, which has the potential to change not only consumer manufacturing operations but home construction, food production, and many other industries.

What about inventory management? What disruptive technology is in the works to shake things up in this important area of running a business?

Here are a few developments that fit the bill by making advanced inventory management tools available to more companies and also making them easier to use:

Online Inventory Management

When Intuit launched an online version of its popular QuickBooks software it was a glimpse into the future of accounting. Most companies still do their accounting on a desktop software application, but the SAAS model is suddenly becoming more attractive.

This is a challenge to inventory software providers to step up to the plate and change. It will be interesting to see who takes up that challenge first and comes out with a complete online inventory management solution that integrates with QuickBooks.

This is extremely disruptive to the normal way of doing business because it means software developers have to work with multiple browsers, not just operating systems. Plus, it changes the whole pricing scheme for inventory software. And it encourages a BYOD (Bring Your Own Device) mentality at businesses using inventory software. This has many benefits and risks attached to it.

Alternative to ERP

ERPs are traditionally incredibly expensive software platforms. Most small businesses can’t afford them, even though they’re extremely helpful in managing a business’ finances, inventory, and other logistics. It’s especially useful to large corporations with complex operations.

What if a comprehensive solution comes along that does much of what ERPs do, but at a fraction of their price? It’s already happening. Inventory management software providers can integrate their software with QuickBooks and other tools to create something that roughly does the same thing as a full ERP, and it’s actually affordable to small and midsize businesses.

What other disruptive technologies might be coming to shake things up in inventory management? I welcome your thoughts.

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