Andrew Coldrey, Vice-President Oceania at C.H. Robinson tells MHD readers that analysis of risk, thorough forward planning and the support of experienced logistics providers can better equip SMEs to compete against larger organisations.
Supply Chain management is often an area of weakness for Small/Medium Enterprises (SMEs), which can lack the knowledge or cash flow to invest in internal technology and logistics managers.
Consequently, they will no doubt feel the pain of logistical disruptions more than larger organisations, which have the infrastructure to absorb the costs and reorganise its supply chain on short notice.
C.H. Robinson Vice-President Oceania, Andrew Coldrey has expressed the importance of good logistics management for SMEs. “While getting your product to your customers is the end goal, the process of how it is transported is a key consideration,” he says.
“SMEs face a number of hurdles when aiming to transport their goods efficiently and therefore it is crucial to business survival that the end-to-end journey is well managed.”
When ensuring effective logistics management, SMEs should consider three key areas; these are risk management, forward planning and engaging with a logistics provider that protects your business and provides visibility solutions, such as the container prioritisation tool.
Risk management
A level of risk must be assumed when transporting goods, regardless of the mode, as some elements of the journey, such as weather disruptions, port delays and global pandemics are out of a company’s control. However, by identifying all potential risks in the transport journey, counter-measures can be implemented to mitigate them.
During times of non-crisis, risk management is often seen as an afterthought, rather than a key element of effective planning. Research by the Global Supply Chain Institute at the University of Tennessee has shown that only 25% of companies’ end-to-end supply chains examine risk factors. The COVID-19 Pandemic has shone a light on weaknesses in supply chain and where companies have left themselves open and vulnerable to risks.
“If this pandemic has taught us anything, it’s that issues and risks can come out of nowhere and companies without a risk management program are leaving themselves vulnerable,” Andrew says.
“A primary element of risk management is determining at what point in the journey does the risk transfer from seller to buyer.
“Using internationally recognised measures such as the Incoterms, easily defines the responsibilities upheld by the buyers and sellers, clarifying which party bares the risk at which point in the supply chain.”
By identifying all potential risks and utilising Incoterms, SMEs are able to develop solutions that minimises the overall impact to the organisation.
Forward planning
One of the best ways to mitigate both known and unknown risks is to implement solid forward planning practices. With the air freight industry strained and severe congestion impacting sea freight, forward planning has become even more crucial.
The reason SMEs are often disproportionally impacted by supply chain disruptions usually is because they operate with smaller inventory. Consequently, any adverse impact on inventory will often have a greater effect on an SMEs overall business. By forward planning more conservatively when it comes to stock levels and product arrival buffers, SMEs can often reduce the impact on the overall organisation.
Forward planning gives companies the peace of mind by knowing that upcoming risks and interruptions are accounted for and secondary measures are put in place to ensure an efficient supply chain.
“Planning for disruptions such as Gold Week in China and extra congestion during the peak Q4 period, enables an SME to minimise supply chain issues and maintain a strong product flow,” Andrew says.
“The management of end-to-end supply chain relationships are crucial to identifying inefficiencies and adapting existing planning models to account for interruptions.”
A reason SMEs are disproportionally impacted by supply chain disruptions is due to usually operating with a lower inventory level. Consequently, any inventory affected will often be a larger proportion of their overall business. By forward planning more conservatively when it comes to stock levels and product arrival buffers, SMEs can reduce the impact on the overall business.
Engaging a solution driven logistics provider
Supply chain visibility and keeping up to date with technology developments are major issues for SMEs, which unlike their larger counterparts, often lack the cashflow to invest heavily in logistics. While risk mitigation and forward planning can be undertaken in-house, they are enhanced when overseen by a knowledgeable and experienced account manager.
C.H. Robinson’s investment in technology helps the logistics provider to guide customers of all sizes navigate the complex and ever-changing environment. C.H. Robinson’s container prioritisation tool enables customers to see the location of their containers in real time, facilitating supply chain adjustments as necessary.
The visibility provided by these solutions provides a peace of mind that SMEs may be unable to receive with internal insights.
Effective logistics management is crucial for all businesses regardless of size. Through analysis of risk, thorough forward planning and the support of experienced logistics providers, SMEs can be better equipped to compete against larger organisations.