Improving your supply chain: where do you start?

Your company is growing, but your operations require increasingly more attention. Employees search for inventory that is available according to the system, orders are prioritized at the last minute, and additional revenue comes with additional costs. Where do you start: more staff, new software, or a different warehouse layout? Not with the solution, but with the question of what your supply chain needs to deliver and what is currently standing in the way.

This first article in the series 'Building a Strong Supply Chain' provides you with a practical sequence. Five steps help you move from loose improvement ideas to well-founded decisions. Not everything has to happen at once; however, it must be clear how each step contributes to your business goals.

1. Determine what your supply chain must deliver

Start with the customer promise and the direction of your company. Do you want to process more orders with the same space, deliver more reliably, or tie up less capital in inventory? These goals do not automatically require the same approach. For example, a lower purchase price through larger orders can result in higher storage costs and obsolescence risk. Therefore, assess the impact on the entire chain, not just the benefit for a single department.

Choose a limited number of goals and define for each goal what you measure, who is accountable, and when you expect results. For instance, combine delivery reliability with cost per order and inventory value. This prevents an improvement on one metric from invisibly compromising another.

2. Establish a baseline of daily operations

Track an order or material flow from start to finish. What steps are performed, where are there waiting times, and where do employees have to re-enter information? Combine system data with observations and conversations on the shop floor. A dashboard may show that an order leaves late, but not that the picker first had to spend half an hour looking for a replacement item.

Also verify the meaning and quality of your figures. What counts as 'on time'? When does the measured lead time start? Are goods movements recorded immediately? Not all information needs to be available in real time, but it must be reliable and timely enough for the decision you make with it. Include a representative period, incorporating relevant peaks and exceptions.

3. Select the bottleneck that makes the biggest difference

A baseline measurement often reveals multiple areas for improvement. Prioritize the issue with the greatest impact on your customer promise, costs, or available capacity. First investigate the root cause: extra staff does little when employees are primarily waiting for order release. More inventory does not fix improperly configured reservations.

Compare potential interventions based on expected return, required investment, feasibility, and risk. Involve the departments that will experience the impact. You do not need to wait for a comprehensive change plan to test a clear, safe improvement, but do make assumptions and dependencies explicit.

4. Align working methods, information, and partners

Clarify who does what at every critical handoff. When does sales confirm a delivery date? Who handles an inventory discrepancy? When does a supplier report a delay? Define the required information, responsibility, and escalation paths. This prevents employees from having to resolve every deviation through ad-hoc messaging.

Then assess what support is missing. Sometimes a better working agreement or the proper use of existing software is sufficient. In other cases, an integration, customization, or new solution is needed. Justify that choice based on the process and expected value. Specifically involve suppliers in bottlenecks where their information or performance is decisive.

5. Test, measure, and embed what works

First test the chosen improvement on a defined process, product category, or team. Agree in advance on how you will evaluate the effect and compare it against the baseline measurement. Take into account differences in volume, order type, or staffing levels, so that a quiet week is not mistakenly seen as a positive result.

If the adjustment works, document the new working method and train the employees involved. Assign an owner and discuss deviations in a regular cadence, such as during a daily stand-up or weekly meeting. Improvement is only embedded when operations can continue to work with it, even after project support ends.

Practical example: stock on hand, yet still searching

Suppose a manufacturing company wants to hire additional warehouse staff because materials arrive too late at assembly. Observations show that employees regularly pick an alternative part, but the system deducts the original item. As a result, both stock levels deviate, and the searching begins anew with subsequent orders. This is an illustrative example, not a client case.

The first intervention is then not automatically additional headcount. The company must have suitable alternatives approved and accurately record actual consumption. Subsequently, it can test whether search times, material shortages, and rush requests decrease. Only then does it become clear what capacity issue, if any, remains.

Your first step: one bottleneck, factually investigated

Choose one recurring problem that affects your delivery commitments or profitability. Follow the process together with the employees involved and document what happens, how often, and with what consequences. This creates a well-founded starting point for improvement without immediately launching a large-scale change program.

Do you know that your supply chain can perform better, but lack the insight to determine where improvement yields the most? With our diagnostic modules, we target and map your improvement potential. View the modules and discover which analysis matches your challenge.