Supply Chain KPI Killer #10: Eliminate Logistics KPI Headaches with Digital Solutions

In our entire series of KPI Killer, we're discussing critical topics for the logistics and supply chain industry. We help you understand the root causes of daily operational challenges and how to tackle common errors in warehouse or transportation jobs. Today's article is the final one in the series, and in this part, we want to help you excel cost-effectively while remaining innovative.

We'll discuss technology adoption, where digital solutions may still require more work to deploy for small and medium-sized businesses. We know better than anyone else how SMBs need help with modern technology and software challenges. We've had honest conversations with companies that wanted to reorganize their warehouses but faced tremendous failures by working with the wrong software partners. Here, you'll learn which digital solutions are essential for your supply chain and how to choose the right partner. All of this will be outlined simultaneously, with guidance on how to avoid KPI setbacks and improve your performance.

How do digital solutions help with key performance indicators?

An indicator KPI for your supply chain tells you the values your customer looks for to ensure you deliver the required value to their organization. You can also use your internal KPIs to track ongoing issues in your business and improve them before they cause problems later on.

Before we describe in detail why some small and medium-sized businesses struggle with digitalization and how to find a good partner, we want to outline where and why you need software to improve your Key Performance Indicators.

The software can primarily help with data management through collection, evaluation, and analysis. Based on these three pillars, you can gain insights into how your business is performing and more easily identify bottlenecks. You can analyze the root cause of issues based on detailed data registration. These are the basics you likely already know. The fact of the matter is that now, we will help you see why you may need specific software solutions to avoid KPI setbacks.

Digital solutions can significantly improve the accuracy, efficiency, and accessibility of key performance indicators. It is how you can provide valuable insights to businesses:

Real-time data collection and analysis. The software provides highly efficient automation of processes. This is done through digital tools that can automatically collect data from various sources. In short, software helps eliminate manual data entry errors and saves time.

Improved data accuracy and reliability. The software provides precise data validation. Digital solutions can validate data to ensure accuracy and consistency across your volumes, whether shipping or stock. This reduces the risk of errors and inconsistencies. Moreover, automation can help clean and prepare data for analysis to remove duplicates and inconsistencies.

Enhanced data visualization. The software also provides interactive dashboards for less computer-savvy personnel. This is another one of the many digital tools where you can create interactive dashboards that present complex data clearly and visually appealingly. You can get a clear overview of your KPIs to help people track performance. Just a tip. What else? You can customize reports so your business can generate customized reports to focus on specific KPIs or metrics most relevant to their goals.

Facilitated decision-making. Nothing helps better get data-driven insights than software. So, by providing accurate and timely data, digital solutions enable businesses to make more informed and effective data-driven decisions.

Improved efficiency and productivity. Here, again, we look at automation, where with software, automation of routine tasks can free up employees to focus on more strategic activities. You'll be able to streamline processes, reducing inefficiencies and improving overall productivity.

Enhanced customer experience. All KPIs are about personalized data tuned to customer needs. Digital tools can enable businesses to personalize services based on customer expectations and individual preferences. For example, customers may want faster response times. So, digital solutions can improve response times to customer inquiries and complaints, leading to higher customer satisfaction.

Cost reduction. Nothing is more important for KPIs than efficiency gains visible in savings. Digital solutions can help businesses reduce costs by streamlining processes and reducing manual tasks. Moreover, data-driven optimization gives insights to help identify areas where costs can be reduced or optimized.

Why do small and medium businesses struggle with digital solutions?

Well, first of all, I recall talking with manufacturing companies with large warehouses about their problems with software providers. The issue was that the software agency developed custom software for them, but it had many bugs and wasn't delivered on time. Due to this flawed solution, they were stuck with poor production and had to wait until the software was fixed. This resulted in additional costs for the manufacturing company—both for extra time to fix the bugs and because their operations couldn't function properly in the meantime.

One specific problem was that a data management module for digital documents wasn't working, so instead of entirely switching from paper to digital, they were still managing shipping documents on paper.

What I see here are several problems that I've outlined below:

• Wrong contracting. The contractual agreement needed to be reviewed professionally with external experts to understand all the drawbacks, resulting in the manufacturing company paying extra time to fix the software issues. The problem was also whether it was better to choose the same company to fix what they didn't deliver instead of forming another partnership with another business.
• Poor deliverability. The software house built an overly complex solution and could not go live on time. It was due to several factors, including a lack of understanding of manufacturing processes and insufficient knowledge of document management.
• Inability to handle increased workloads. After investigating the problem further, it became clear that the software house was relatively small and unable to handle more significant projects. They could not deliver the solution promptly, and when bugs arose, they were beyond the scope of what the software house could hold.

6 things that can go wrong with software for supply chain

In general, when you embark on your software journey—let's call it that, a bit poetic—you may see other problems that can also affect you significantly if neglected or overlooked. So, before you contract a software solution, whether it's a WMS system or a TMS system, think about what can go wrong. I've summarized these factors for you here:

1. Business and technical requirements for the supply chain

• Lack of understanding of manufacturing processes. Software houses may not fully grasp the intricacies of manufacturing operations, which will soon lead to solutions that don't align with real-world needs.
• Incomplete or inaccurate requirements. Clients may need to understand their requirements more clearly. This can result in software that doesn't meet expectations.

2. Integration challenges

• Compatibility issues. Software may not integrate seamlessly with existing systems. Again, you expect this to lead to disruptions and inefficiencies.
• Data migration problems. Transferring data between systems can be complex and error-prone.

3. Performance and scalability issues

• Inefficient code. Software may not be optimized for performance, leading to slow response times and bottlenecks.
• Inability to handle increased workloads. The software may not scale well to accommodate growing production demands.

4. Lack of domain expertise

• Limited understanding of industry-specific regulations. Software houses may not be familiar with industry-specific regulations, which may relate to quality standards or safety requirements.
• Inability to provide tailored solutions. Without domain expertise, it can be difficult to deliver solutions that address the unique challenges of the supply chain industry.

5. Communication and collaboration gaps

• Miscommunication. Poor communication between clients and software houses can lead to misunderstandings and delays.
• Lack of collaboration. A lack of collaboration between teams can hinder development and lead to poor solutions.

6. Unrealistic timelines and budgets

• Overpromising and underdelivering. Software houses may commit to unrealistic timelines and budgets. So think twice before making highly cheap offers, as these can lead to delays and cost overruns.
• Scope creep. Projects may expand beyond the initial scope, which could again result in increased costs and delays.

How do you choose a software partner for the supply chain?

What do you do to not jeopardize your operations with the wrong partner in software development? Well, I outlined three significant steps for you. You'll find more about it in the other articles we prepared for logistics and supply chain companies. So, click here to see more on how to choose a software partner, and see below are 3 top things to follow up on:

• Industry expertise. You should instead look for a software partner with a deep understanding of your industry and its specific challenges. Only people who have worked in logistics and supply chain should be hired. Your sector's supply chain management experience can provide valuable insights and tailored solutions.
• Scalability. First, consider your business's potential growth and ensure that the software can handle increased volumes and complexity. Each business has the possibility of growing, and if you choose the wrong solution, you may get stuck with an ineffective system. A scalable solution will prevent the need for frequent upgrades or replacements as your operations expand.
• Long-term partnership. Each partner should be reliable and able to build long-term cooperation with you. They should also be able to foster trust and collaboration. I advise you to consider your choice based on their commitment to ongoing support and development of their solutions.

Summary

Choosing the right logistics and supply chain software partner is critical to avoiding operational disruptions. To ensure a successful partnership, you should prioritize the software provider's industry expertise, scalability, and long-term commitment. To learn more, visit our Adexin blog and gain deeper insights. For more in-depth information and additional tips, we offer our comprehensive articles on choosing the perfect software partner.

This was the last article in our series on Supply Chain KPI Killer. Below, you can see other articles we refer to and advice on choosing a cost-effective approach to lowering KPI impact. So, see you next time, and don't miss our updates on logistics and supply chains on our LinkedIn profile and website.

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