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Is Your Internal Supply Chain Important?

April 7, 2022

If you have never heard of an internal supply chain, you are in luck. Oftentimes, when people think about the supply chain, they are only thinking about external components like raw materials, inbound and outbound logistics, or manufacturing. What businesses fail to do is identify their internal supply chain operational gaps.

First, what is an internal supply chain? It’s a chain of activities inside a company, including production, purchasing, sales, distribution, project management, and in-house manufacturing. When we think about internal operations, each component operates in a siloed environment. However, each siloed environment is interconnected and interdependent with the rest of the supply chain, so the question becomes, is your internal supply chain necessary?

The short answer is yes.

The internal supply chain plays an intricate role when producing the final product that will eventually be delivered to your customers. If there’s even one gap in your internal supply chain link, it will have a domino effect on all other areas and the final product.

If one area, like project management, fails to communicate a timeline change, most of the time, it can be resolved quickly with minimal expense. However, in a manufacturing, shipping, and logistics setting, those remarkably simple tasks, can lead to enormous, expensive problems such as having the wrong dimensions, delaying the delivery date, or delivering to the wrong location.

For example, your company deals with raw materials. If the proper compliance documents are not filed, there can be legal ramifications. In other cases, the product would be built incorrectly, which is not helpful for your customers. Additionally, with current supply chain issues, raw materials are more difficult to replace, so ensure you have the correct specifications the first time.

It can be easy to point fingers at whoever did not receive or share the message with the right person. The bigger problem, than the lack of communication between historically siloed departments, is the lack of the right technology.

How did we get here?

The internal supply chain predicament is a result of operationally inefficient processes such as the lack of technology adoption both internally and externally and stretching our human capital to the point of unsustainability. It’s impossible to automate everything. We will always need humans; they need to be tasked with smarter jobs. What I am suggesting is looking at today’s marketplace. We don’t need a ton of workers to make things more efficient. This is where technology becomes an imperative investment. We can capitalize on technology’s ability to automate manual tasks, allowing our human capital to be doing something more valuable.