Your company’s supply chain is the lifeblood of your business. It’s the network of suppliers, manufacturers, warehouses, and transportation providers that gets your products to customers. But there are some common myths about supply chains that can end up costing your company a lot of money if you believe them. Let’s debunk 7 of the biggest supply chain myths:

Myths about supply chain and money loss you need to know.

 Myth 1: Your supply chain is unique

Many companies think their supply chain challenges are one-of-a-kind. But the truth is, supply chain managers across industries face very similar problems – things like frequent stockouts, customer service demands, forecasting issues, inventory inaccuracies, productivity challenges, and the hunt for good supply chain talent. 

The reality is, no business has an isolated supply chain in today’s global market. You’re competing for the same resources and services as other companies, even if you’re in a different industry. Realizing this can be empowering – you can learn from how other companies have overcome common supply chain hurdles.

 Myth 2: Supply chain is all about experience and gut instinct

A few decades ago, most supply chain decisions were based on the experience and intuition of supply chain veterans. But trying to manage today’s complex supply chains using only gut feel is a recipe for disaster. 

Modern supply chains generate massive amounts of data from machines, warehouses, sales reports and more. By analyzing this data, you can make much more informed, data-driven decisions. For example, you can use demand data to predict the next big trend, or supplier capacity data to avoid delivery delays. Relying on data instead of just experience allows you to be more proactive and avoid costly mistakes.

 Myth 3: Supply chains should always focus on cost reduction

Many supply chain professionals are laser-focused on cutting costs above all else. But what about increasing profits and revenue? Shouldn’t supply chain also be about spotting new market opportunities before competitors and fulfilling that demand first? 

The goal of supply chain should be creating value, not just minimizing costs. You can add value by collaborating with suppliers on new ideas, offering better service, and leveraging innovative technologies. Companies that embrace digital supply chain capabilities can boost revenue by creating new business models, improving productivity, and transforming their workforce.

 Myth 4: Lean supply chains are less resilient

There’s a common belief that lean supply chains with minimal inventory and redundancies are more vulnerable to disruptions. But the evidence doesn’t support this. Many companies with lean, efficient supply chains were able to weather the pandemic and other recent shocks better than those with bloated inventories.

The key is to be lean in the right places, not across the board. You want to minimize inventory where it doesn’t add value, but maintain buffers where it’s critical. And you need to be able to quickly ramp up production when demand spikes. Visibility and agility are more important for resilience than just having a lot of inventory sitting idle.

 Myth 5: Reshoring will make supply chains more resilient

In response to supply chain disruptions, many companies are considering moving production closer to home through reshoring. The thinking is that domestic suppliers will be more reliable and less vulnerable to global shocks. But reshoring is not a silver bullet for supply chain resilience.

Domestic suppliers can still face disruptions from things like natural disasters, labor shortages, or equipment failures. And reshoring often means higher costs and less flexibility. The most resilient supply chains have a balanced global footprint, with multiple suppliers in different regions. This geographic diversification helps mitigate risk from any single disruption.

 Myth 6: Supply chain is just about logistics and transportation

Some companies still view supply chain narrowly as just the logistics of moving products from A to B. But modern supply chain management involves so much more – things like supplier relationship management, demand forecasting, inventory optimization, production planning, and new product introduction. 

Supply chain professionals today need to be strategic thinkers who can align the supply chain with overall business goals. They need to collaborate cross-functionally with sales, marketing, finance, and R&D. Treating supply chain as just a tactical function is a big missed opportunity to drive competitive advantage.

 Myth 7: Supply chain is a cost center

Many executives still see the supply chain as a necessary evil – a cost to be minimized. But the most successful companies view supply chain as a strategic asset that can create value and competitive differentiation. 

A well-run supply chain can boost revenue by getting products to market faster, improving service levels, and enabling new business models. It can reduce costs through better inventory management, supplier collaboration, and process automation. And it can mitigate risks like stockouts, recalls, and disruptions that can be very costly.

The bottom line is that the supply chain is too important to be managed based on myths and misconceptions. By understanding the realities of modern supply chain management, you can avoid costly mistakes and unlock the full potential of your supply chain to drive business success. Don’t let these myths cost you money!