by Channel management involves creating operational strategies that go beyond a single organization. Channel management strategies bring together partners in a supply chain, including material suppliers, manufacturers, distributors and resellers, in an effort to lower costs and increase operational efficiency throughout the chain.
Strategic Partnerships
Developing long-term relationships with your suppliers and retail customers is the first step toward effective channel management. Rather than switching suppliers for price discounts and promotional offers, build a solid supplier base by entering into price/volume contracts, cooperative marketing arrangements, inter-company financing arrangements or other activities designed to strengthen your relationships. Develop a loyal reseller base by helping your resellers to market and sell your product effectively. Provide credit arrangements to loyal retail customers, and offer price/volume contracts to your customers as well.
Technology Leveraging
Technological tools can be used to increase efficiency along a supply chain, but dedication and cooperation is required of all parties. Automatic order systems can instantly place orders along the supply chain when stock levels reach economic quantities. Picking, packing and shipping activities can be tied into automatic order systems to further improve efficiency and decrease delivery lead times. Order tracking technology can help individual companies to provide better customer service by knowing exactly when materials and other orders will arrive.
Vertical Integration
Vertical integration is the act of purchasing or building your own suppliers or customers. This technique can be costly and sophisticated compared to others, but vertical integration can provide the most significant cost savings and quality control of all channel management options. Owning your own supplier or retail customer can allow you to set your own prices along the supply chain and exercise total control over operational procedures and quality standards.
Logistical Support
Acting as a consultant to your suppliers and resellers may be one of the most hands-off channel management techniques, but it can still improve efficiency and productivity across the supply chain. Sharing best practices, technological innovations and managerial expertise can help your strategic partners to get their houses in order, resulting in lower prices and higher quality from suppliers, as well as more reliable orders from resellers. Providing marketing materials and sales training to resellers’ employees can help to boost sales for your brands as well.
Monitoring
Continually monitor and assess the performance and progress of your supply chain. Create thorough monitoring systems to accompany each channel management technique, whether it be something as simple as employee and customer surveys or something as complex as statistical reports from a chain-wide automatic order system. Reassess your supply chain strategies regularly and adjust them to respond to changes in the market or in a particular link in the chain.
Channel integration
Supply chain integration is a process where the all the parties involved with the fulfillment of a product are integrated into a single system. This requires significant coordination and alignment in order to ensure everyone is effectively working toward the same goal at all times.
Having the parts required for a product show up where they are needed, when they are needed, helps to not only prevent delays in the manufacturing process, but also eliminates a lot of wasted time, storage space, and more. When done properly, supply chain integration will bring parties that are often at odds together with a single focus.
All of the materials and components from along the supply chain are needed, and by integrating everything into a single system, it is much easier for effective product creation.
Information Sharing in Supply Chain Integration
The concept of supply chain integration goes back many decades, and it has been used by companies around the world to improve their systems dramatically. While there are many different ways that this type of thing can be implemented into a system, one of the most important things regardless of how it is used is going to be information sharing.
When looking at the information sharing of supply chain integration, most companies go through a series of stages once they begin working toward a full supply chain integration. These stages are as follows:
- Baseline: This is the first stage, and it is when every department or system within a company is managing their own supply chain, and related issues. Companies also refer to this as a siloed approach, and while it can have some benefits, it is quite inefficient.
- Functional Integration: In this next stage, all the different departments within a company will work together to help to improve efficiency and reduce cost. This could be done by combining orders, scheduling jobs together, or other important steps.
- Internal Supply Chain Integration: All the departments within a company are connected using the same systems. This will almost always involve using some type of IT infrastructure solution that allows the departments to work efficiently together, share their needs, and identify collaboration opportunities.
- External Supply Chain Integration: The final stage involves external vendors as well as all of the internal departments. Providing a vendor with system access, and encouraging them to function almost as another department helps to generate the best possible results.
Integrating Supply Chains
When it comes to integrating supply chains within a company, there are quite a few things that need to come together. The following are some of the key steps that most companies will need to take during this process:
- Choosing Vendors: Choosing vendors is more than just finding one that can provide the necessary parts. In addition to that, the vendor must be able to supply their piece at the needed time and place based on the overall supply chain.
- Internal Teams: Working with the internal teams of a company to work based on the needs of the overall system rather than just their department. Having set procedures based on the big picture can help to eliminate waste, and improve efficiency.
- Waste Elimination: While often overlooked, waste elimination should be an important part of an effective supply chain integration. This can happen when either a vendor or an internal team will physically relocate in order to more efficiently complete the work that needs to be done.
There are many other things involved with effective supply chain integration. This can seem like a very complex process, and in many ways, it really is. Once the initial integration is completed, the system should run very smoothly for years to come.
In most cases, the initial integration of the supply chain will require that all parties get together to discuss their abilities, as well as their needs. Going over all the logistics in an open environment will help provide everyone the opportunity to make suggestions, express concerns, and overcome obstacles, before it is ever implemented into a production environment.
Supplier Integration
There are many points along the production process where the suppliers and the producers meet. This would be where the suppliers bring specific parts, resources, or other items to the producer for use. Ideally the supplier will deliver their supplies directly to where they are going to be used, or at least as close as possible.
This requires that those who produce products provide their suppliers with more access, training, and other resources than many companies are used to. In essence, this can move the relationship from a supplier-customer relationship to a true partnership.
This often requires some additional investment on the part of the company, and may even mean higher overall prices for the products because more expected from the suppliers. On the surface, this may not seem to make sense, but the added efficiencies can really make this relationship pay off. In addition, when there is a symbiotic partnership between two companies like this, it is much more likely that the supplier will go above and beyond to meet the producer’s needs when things aren’t going according to plan.
