As the first quarter of 2024 draws to an end, many of us might be evaluating our New Years Resolutions to increase activity, eat better, or maybe the focus is on our professional lives. It’s also a good time to re-evaluate your supply chain with those same intentions in mind.

Against protestations from a Sales team or two, your supply chain is the single largest investment for your business. As with your other investments (like your health house or career), a periodic review is necessary to ensure the bones don’t creak and the muscles are stretched.

Here are 6 Things to keep in mind when evaluating your supply chain operations:

  1. First, where are you with costing year-over-year?

Calls and Echoes of ‘Inflation’ from your suppliers to justify cost hikes may illustrate complacency. Yes, inflation is among us. What are your suppliers doing about it? When was the last time your organization sent an RFQ (Request for Quote) to reinvigorate costing competitiveness?

  1. How exposed is your organization to likely tariff increases in Asia?

You may have re-shored your products or have inherently less exposure to tariffs, but what about suppliers? A mini-Summit in China last week between foreign finance ministers illustrates that tariffs are front and center. With China’s infrastructure creating overcapacity in a variety of markets (steel, EVs, plastics, ceramics, etc), the US is warning that tariffs could be applied to prevent China from dumping these cheaper products in the market. Where is your organization positioned when they do so?

  1. With interest rate increases, there’s been less capital investment.

Where are your suppliers positioned for capacity growth or cost mitigation efforts? It’s going on 3 years since capital rates have fallen, creating some pent-up demand for capital investments. In private equity, the standard brag is that a firm will double in size in 3-5 years. When was the last time you checked with your supply base to ensure that could be supported?

  1. Have you maximized your transportation and small parcel spending with a 3PL, which has the ability to reduce your costs by pooling your spending with others?

One of the single largest no-brainers in the supply chain is the ability to pool your transportation spend in all forms with others by way of a 3rd Party Logistics supplier. They will pool your spending with other spending, increasing the buying power and mitigating internal efforts. Instead of placing 1000+ POs to support your logistics spend each month, why not just place one PO?

  1. What contingency factors are in place for likely continued upward pressure on Ocean container costs?

With the ongoing in the Middle East and drought conditions in the Panama Canal, ships are taking much longer to get to port (longer means costlier and reduced capacity). General Rate Increases (GRIs) are the tip of the sword when it comes to supply chain cost management. Do you have alternatives to leverage against higher proposed costs? Something as simple as a commodity management program can offset transportation GRI’s over a year and are not difficult to set up.

  1. Have you made the proper decision internally on breaking down Sourcing vs Buying/Purchasing?

Buying is placing POs. Sourcing is deciding where to place those POs and at what cost, quality, specifications, and cadence. It is difficult to do both with a single resource with significant benefits to separating the tasks.

The analogy of exercise against a review of your operations and supply chain could go on forever as would the analogy of maintaining your vehicle (‘Check Under the Hood’). The premise remains that if your supply chain isn’t healthy, your organization isn’t either and a return on investment associated with a “Check Up” are significant.

Want to learn more? Reach out to our expert consultants directly