January 26, Characteristics of an Effective Supply Chain Strategy No business is complete without an effective supply chain, but deciding on the right supply chain strategy to govern your business processes is far easier said than done. No matter what your product or service is, running a business is a complex endeavor fraught with as many pitfalls as opportunities. Still, while the specific criteria that would optimize your revenue may vary depending on your industry, you can count on certain characteristics to remain consistent with the design of any winning supply chain.
Best-in-class supply chains should take a systematic approach to updating and improving their performance, since they will need to take numerous variables into account such as order volumes, frequency, special needs, and delivery locations. Starting with customer needs, improving supply chain performance systematically will bring about the most effective adjustments to reduce costs, minimize issues, and increase profits.
The following are the top most important general areas that apply to nearly every supply chain business, regardless of size or industry. Some are even contradictory and result in additional unnecessary costs or worse, customer issues and complaints.
When considering your supply chain fulfillment, set your processes based first on what your customers actually need or request. For some more complex supply chains with a diverse range of customers, it may be most effective to have different supply chains for different customer groups.
Setting Supply Chain Strategy An intentional supply chain strategy will help frame your goals and the flow of fulfillment for optimal efficiency. An effective supply chain strategy will meet these important points: The strategy is clearly documented and understood.
It is acknowledged company-wide that the supply chain involves or should involve all areas of the company, from sales and marketing to research and development, purchasing, manufacturing, logistics and beyond.
Customer dissatisfaction regarding services or costs is not consistent or widespread, and cases are addressed with adjustments to prevent recurrence. The supply chain strategy is adaptable to meet the needs of the customers and the business as they evolve.
Strategic imperatives of the supply chain are clear and precise to allow for quick decisions on adjustments.
The planning team will want to work to eliminate waste and redundancies in the process, since defragmented processes are costly. Your team may also want to reach out to vendors or manufacturers of high ticket items that you purchase frequently in order to get more competitive quotes to ensure optimal pricing.
Start by setting service expectations with the customers, followed by establishing lead times with your suppliers, analyzing and identifying performance of your current network, testing cost reduction alternatives, and considering a transformation of your whole network, if necessary.
When analyzing your current network performance, be sure to consider all costs: An outsourced partner should be either more skilled or more efficient than your company at performing the service. Outsourced services should not be core to the business, and can offer some excellent benefits in addition to reducing costs: Outsourcing provides more resourcing flexibility and a cost structure that is variable for cost-effective growth.
Access specialized services, technology or equipment without having to invest directly. In addition to outsourcing, automation is a key to reducing supply chain costs and improving performance, since automation reduces errors and increases efficiency.
Automated solutions can cover all warehouse processes, from receiving, put away, transfer, picking, packing and shipping. Cargo management and delivery rules optimize inbound and outbound flows; reduces time spent on incoming cargo and optimizes the delivery of orders to customers.
Utilizing Assets for Greater Productivity One of the simplest ways to improve supply chain performance is to evaluate your assets and usage to identify areas for adjustment. Supply chains are complex systems, and almost every chain will have assets that are underutilized, such as inventory, facilities, equipment or vehicle fleets.
Underutilized assets are a direct cause of inefficiency and superfluous costs. Look for ways to either increase utilization, adjust processes to make utilization more efficient, or offload assets that your supply chain no longer needs. You can also make your outsourced resources and assets more efficient and cost-effective.
Another example you might consider if you have seasonal business that requires additional warehousing is finding an outsourced partner for seasonal expansion.
Tracking Performance After making adjustments to the supply chain, the next important step is to track the results. Good performance will come as a result of the correct perspective and approach to KPIs: Your analysts and decision makers recognize your KPIs as relevant and meaningful instead of dismissing or ignoring them.
KPIs are consistently tracked and reviewed, and targets are adjusted accordingly. Supply chain performance improvements are driven by your KPIs. Performance tracking is vital not only to review the success of the changes made to supply chain processes and technologies, but also to more accurately forecast for base supply, logistics and stock renewals in order to maintain optimal stored stock levels.
The performance of your supply chain should be reviewed periodically when applicable in order to adjust accordingly for continued improvement, reduced costs, and optimal profits. Continuous improvement is the key to excellence and success!A supply chain is a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer.
and other factors in evaluating the overall effective performance of a supply chain. Supply chain management is a frequently encountered phrase these days, as managers strive to improve factory performance.
The trouble is that all too often the real meaning is lost. Instead, a casual observer might interpret the activities at the factory as evidence of an intensive effort to improve supplier management. Question: Is best practice supply chain planning simply a function of incorporating more leading practices?
Answer: No. Leading practices in supply chain planning abound. A simple Google search yielded more than 54 million results. Those practices include everything from sales and operations planning to material requirements planning and .
Supply chain management (SCM) is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. It represents a conscious effort by the supply chain firms to develop and run supply chains in the most effective & efficient ways possible.
Question: Is best practice supply chain planning simply a function of incorporating more leading practices? Answer: No. Leading practices in supply chain planning abound. A simple Google search yielded more than 54 million results.
Those practices include everything from sales and operations planning to material requirements planning and demand management to vendor-managed inventory. Supply chain management (SCM) is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage.
It represents a conscious effort by the supply chain firms to develop and run supply chains in the most effective & efficient ways possible.