Supply Chain Optimization in Simple Steps

 

Supply Chain Optimization in Simple Steps in kapoklog Logistics supply chain Management

Optimizing your supply chain is easy when you have the right tools and the right information to make the right choices. Optimizing your supply chain comes down to a few key tools and policies that you can quickly implement to improve your supply chain efficacy.

There are five simple steps you want to keep in mind when you are considering how you can improve your supply chain.

Collaboration

Tools and planning

Equipment

Utilize a responsive system

Act locally but think globally

We will investigate each of the five ideas listed above in detail to discover the simple steps to optimize a supply chain.

Collaboration

If there is one thing that is important to optimizing your supply chain it is open collaboration with your suppliers and retailers. Mining data to improve your logistics by openly collaborating with every member of the supply chain can help you to improve your response time, shipping costs and all around logistics. Sharing information and deciding on uniform packaging, shipping and storing processes can easily help to improve the supply chain.

Collaborating with members of your supply chain can alert you early on to any issues that are present that can be improved upon. Collaboration offers immediate benefits like service improvements. Collaborative efforts can be vertical collaboration – collaboration between suppliers and customers or even with competitors in a similar chain.

Identified barriers to collaboration are the unwillingness to share information, lack of resources and they can be costly endeavors. Ultimately the extra effort is a great investment in your business and in optimizing the possibilities of your supply chain.

Collaborative efforts can reduce the possibility of latent data exchange that can slow down the supply chain. Often failings in the chain are directly related to receiving latent data that is outdated and that cannot be utilized. Collaboration can help to avoid “miscommunication” and sharing data that is not relevant.

Tools and Planning

The right tools are an absolute necessity. Your tools should include the right material packing options for your particular industry. Proper labeling training for your employees. The right vector for your goods can make shipping, storing and distribution of goods more efficient. Logistics software for planning, inventorying and other logistic activities.

Your tools should also include a strategic plan and a tactical plan. The goal of strategic planning is to be able to define the approach to transportation, stocking relevance, customer service and inventory management. Strategic planning also includes considering your information systems and how they relate to your overall goals.

Strategic planning also can help to plan for predictable change that will likely crop up. Strategic planning has to be fluid. Plans are not made in a vacuum there are always going to be unplanned for variables that crop up that adjustments have to be made for. The right type of strategic plan will have wiggle room for adjustments for those unseen variables that crop up.

Tactical planning is the putting all the planning into motion and the how’s of you will put it into motion. Again fluid planning is important to ensure that adjustments can be made when necessary.

There is not enough that can be said about proper planning and utilizing the right tools to optimize the supply chain.

Equipment

Optimizing a supply chain relies heavily on having the right equipment in the chain. Enhanced equipment options are readily available. One of the easiest things to do is to analyze the current equipment for efficacy and upgrade what you can.

Making simple equipment changes can give you a nice ROI by increasing productivity and helping to reduce losses. This is where collaborating with competitors to get to know what they are using can come in really handy.

As technology improves so does the logistics equipment that powers the global economy.

Utilize a Responsive System

Responsiveness in a supply chain can easily be defined as the “ability to react purposefully and within an appropriate time-scale to customer demand or changes in the marketplace, to bring about or maintain competitive advantage”. Management of supply chain responsiveness is always important but exceptionally important when the organization is in a competitive market and when short lead times are considered critical or when inventory life is at risk.

The goal should be to design the supply chain so that it can quickly respond to changing consumer demands to best meet the needs of the end client. Developing a responsive supply chain system can include increasing so called “safety stock” to have enough product on hand if there is a sudden demand for the product.

Of course safety stock presents its own risk factors but good strategic planning and analysis can help to mitigate some of the risks involved in safety stock. One of the biggest issues of a poor supply chain comes from over estimating the need for safety stock. It is good to be optimistic when preparing and planning but there are pitfalls to over stocking with safety stock. Stock is most organizations biggest assets and overestimating needs or being overzealous by filling up warehouses can be a costly mistake.

Other ways to utilize a responsive system is to create visibility into the supply chain. Models have moved from forecasting to actual demand but have been blinded by the multi-tier chains that are often used in today’s global market. Sometimes responsive means being able to go back to the forecaster model and looking ahead to the future using data collected from members of the supply chain. This is another time when collaboration really pays off.

Being able to respond quickly is dependent on being able to be aware of what is going on with suppliers. A responsive system is a flexible system. A flexible system is largely dependent on the members of the system and their willingness to be flexible. As part of a responsive system you need responsive suppliers and employees. Training and policies can help to effect that change that is needed to ensure that everyone is on the same page and that they can be flexible.

Act Locally but Think Globally

Optimizing your supply chain requires that you act locally but think globally. This applies to your supply chain and your core business. Today it is not enough to have a killer supply chain that is working to increase profits. The supply chain has more responsibilities now than just distributing goods.

As regulations increase to curtail emissions and require a more efficient means of delivering and shipping and to do it all in an environmentally friendly way the supply chain is taking on a bigger load and has to be looked at on a global level.

How are your suppliers from half way around the globe managing their transport? Are they following practices that your organization can stand by? Optimizing your supply chain today is more than just being profit driven it has to be about good practices as well.

Questions or issues about the complete supply chain of any organization can sully the reputation of the organization slow production and reduce the efficacy of the supply chain. Of course act locally but think globally also points to proper planning to enter the global market and distribution in that market.

In both cases planning and knowing who is in your supply chain is very important. Another clear reason that collaboration is very important. You have to focus on your end of the chain but keep an eye on the other end of the chain.

Overall

The real first step in optimizing the supply chain is analysis and knowing when to outsource what has to be outsourced. Many mistakes that are found in supply chains comes down to gross mismanagement which can easily be resolved with analyzing the supply chain and outsourcing what you have to. Gross mismanagement does not mean that the supply chain has been ignored all the time sometimes it means that the chain fails by doing too MUCH. Knowing when to farm out what has to be farmed out can be a saving grace for the supply chain.

Keeping as much of the supply chain process in house is good but not at the risk of having a chain that is failing or that is not working at its optimum. A lot of organizations (especially the smaller businesses) will drag their feet when it comes time to outsource. There is a sense of failure that is associated with sending out the work that has to be sent out but the failing is not recognizing when it is time to outsource.

In many cases outsourcing is the RIGHT answer. Outsourcing part of the supply chain may be the one thing that can optimize the supply chain. You have to know the supply chains strengths and recognize the weaknesses and outsource the point of weakness.

Optimizing the supply chain increases profits, meets consumer demands and allows for smoother overall operation. Taking simple steps can increase the productivity of the supply chain reduce costs and increase revenue for everyone that is involved in the chain.

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