Supply Chain Optimization: What Is It and Why Does It Matter?
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Supply chain processes happen around you all the time. If your company makes a product, procures a product, or does both, and wants to sell it to a customer, you will need to end-to-end supply chain optimization. But how do you know if your supply chain needs optimizing? The method is simple. Are you are getting your customers what they want when they want it, and spending as little money as possible accomplishing that goal? If so, you are on the right track. Unfortunately, this is not the case for many businesses. If you cannot clearly answer that question with an affirmative response, you have some work to do. In most cases, you could be spending less and making better use of your resources. But where do you begin? Keep reading to find out the importance of supply chain optimization and how you can improve your process.
What Does Optimization Improve?
Inventory Control
Inventory management is one of the most important parts of the supply chain. It informs other parts of your processes, including order fulfillment and production planning. This applies to all the items that you have in your warehouse, from raw materials, to finished goods, to extra parts. With a solid supply chain optimization process, you will be able to maintain control of your inventory management. It will also help you fulfill orders for your customers, as you will know at all times if you have enough goods to fill each order on time.
Order Fulfillment
The delivery of your orders on time and accurately is just as important as producing the goods for them. Supply chain optimization makes order delivery more efficient. This includes finding ways to load your trucks or transportation vehicles faster and choosing the best delivery routes to save on costs and present orders to customers on time. These items also fall under the category of logistics planning.
Demand Planning
In addition to inventory control and order fulfillment, accurate demand planning is also an important part of supply chain optimization. By improving demand planning, you can achieve more accurate results, which increases the chances that you’ll have enough goods to meet demand. Additionally, you can avoid producing too many goods that would take up warehouse space. Accurate demand planning also helps you reduce costs. If you have an idea of how much demand you expect to see, you can create a plan based on that demand. If your demand planning is off, you may need to make sacrifices, including extra costs, to reduce lead times to fulfill that extra demand.
Customer Service
It may not be obvious, but customer service is a worthwhile area to improve. Orders that arrive on time make your customers happy, and this is a form of customer service because you’re providing something that they requested and paid for. If you are constantly delivering orders late, optimization can help improve your customer service. A good optimization plan will send you alerts for times when an order may arrive late. This system can also highlight when a customer receives their orders late. With real-time visibility of your delivery processes, you can prepare to offer apologies and discounts to keep your customers happy and loyal.
Decision-Making
One of the most overlooked areas that can be improved by supply chain optimization is the ability to make better decisions. The more your processes are optimized, the more well-informed you will be. As a result, you will be able to make decisions that have a more positive impact on your supply chain. Real-time data is one of the many features supply chain optimization can offer you. It allows you to make decisions on the go, especially in cases of emergencies that need your attention. It also ensures that your data is always current and up-to-date, so you are never making decisions based on outdated information. It has the benefit of informing other of any changes you make to your tactical planning, so everyone involved is in the loop.
How to Optimize Your Supply Chain Process
Of the most important components of any business is supply chain management. It involves almost the entire company; deals with suppliers and customers; and creates the product and services that make up the core of the business. This is why supply chain optimization is vital to ensuring you get the most out of your supply chain. Here are some methods of how you can optimize your supply chain process.
Strategic Optimization
The guiding precept for supply chain management is brand strategy. Supply chains are designed to align assets to meet objectives that support the brand strategy. About 80% of transportation costs are predetermined by network design, which is why optimization solutions provide value. There are many types of solutions available including distribution center (DC) network design, and strategic sourcing. These solutions answer important questions for decision-makers such as what suppliers to source from, what their capacity is, and where to make capital investments.
Tactical Optimization
Once you’ve established strategic optimization, it’s time to put it into action. This step involved improving annual sourcing decisions and product flows, which allows buyers to meet constraints while using the lowest total landed cost. Tactical optimization allows buyers to make informed choices that make the best use of resources, costs, and time.
Continuous Improvement
Since supply chains are dynamic, demand will change over time. New items will be introduced to the system, and geographic locations may expand or evolve. It’s important to continue evaluating optimization techniques to be ready for improvement at any time. By adding this discipline to your strategy, you will experience better product flow through the supply chain, and develop a business mentality that makes evidence-based informed decisions.
Experimentation
Being agile and flexible are huge assets as an organization. Optimization techniques allow companies to use analytical optimization models to replicate current product movements and cost structures. You can test scenarios in this step such as, “What if demand grows by 20% in a specific market?” and analyze responses.
Improve Your Supply Chain with Lean Supply Solutions
Now that you know the importance of supply chain optimization, you may be wondering how exactly you can achieve it. A fool-proof plan of action is to begin with a robust supply chain management software, which is one of the many advantages of working with a third-party logistics provider. The 3PL provider can help you manage every step of your operations so you can focus on improving other important areas of your business such as sales and marketing. They can help you respond to unexpected challenges so you can save time and money without slowing down your speed and success rate.
If you’re looking for the right company to partner with, Lean Supply Solutions is the answer. We arise to the challenge of meeting our clients’ needs through our services which include product fulfillment, warehousing and distribution, e-commerce fulfillment, warehouse pick and pack, order fulfillment, and more. To learn more about outsourcing to our 3PL distribution team, or to ask any questions, contact us today.
- Published in Blog
Why Your Business Needs End-to-End Supply Chain Visibility
Did you know that only six percent of companies have full supply chain visibility? Although this feature is universally desired, few companies understand what it really is and how they can implement it into their supply chain. Businesses cannot run efficiently without the ability to see what is happening at each stage of the supply chain process, and that’s why visibility has become so important. Here’s what you need to know about end-to-end supply chain visibility and how you can benefit from it.
What Is End-to-End Supply Chain Visibility?
Although the concept of supply chain visibility has been around for a while, the feature has changed significantly in recent years. It is no longer controlled within a warehouse, but involves a network of resources spread out across multiple facilities and organizations in different cities and countries. It is the process of tracking and tracing product orders and physical order shipments from the source of production to their destination. Visibility software monitors logistics activities, transport, and the state of events that take place before and during the delivery process.
For all these moving parts to be managed properly, resources of the chain need to be closely linked to get the most of the process. This is where supply chain visibility solutions come in. The flow of information can be shared among suppliers, partners, and customers, who all play a part in the supply chain, so everyone knows what is happening as soon as it does.
Why You Need Supply Chain Visibility
It’s a Game Changer
Visibility can be a game changer for your business. When shippers choose which company they want to ship their products with, you will be at an advantage if you can provide them with the eyes to see where their product is going. Information provided by supply chain visibility can improve your entire operation and make it possible to scale your business. Complete visibility can help you reduce risks, reduce operations costs, and predict and plan to meet the needs of market changes. It will give you more control, better communication, better ability to respond to demands, and resolve issues proactively.
Reducing Costs
End-to-end visibility will also benefit you by providing you cost savings, increased reliability and productivity, and will allow you to establish yourself as a reputable business in the market. It also allows you to analyze, anticipate, and respond to unexpected events, and prepare solutions for crises.
Manage Complexity
Supply chains are growing to reach the global market, but this means processes will become more complex and challenging. It will be difficult to manage your extensive supply chain efficiently and guarantee steady daily operations if you cannot see your processes well. Without proper visibility you will experience a lower service level and notice more unexpected issues and additional costs.
Less Risk
Through smart supply chain intelligence, you will be able to reduce risk and grow your business. End-to-end supply chain visibility can protect you by reducing the chances that errors will occur. Supply chain visibility can help you identify areas with a single point of failure so you can be proactive in finding solutions. It can also provide you with better forecast demand, so you will not run out of a product in peak times. You will also know where your goods might be at risk in transit, and track shipments and transactions at each point.
Boost Efficiency
Real-time data and robust dashboard tools that capture snapshots of parts of your business are just two features that come with supply chain visibility solutions. This data allows you to look across your entire business and see any areas that might get you into trouble. This enables you to shift a workflow to prevent crises, and stay ahead. You can also use these tools to find out if you are receiving too many products in a short amount of time, or if your orders are being rushed.
Improve Customer Relationships
Supply chain visibility also shines in terms of your relationship with your customers. Not only can you prevent problems easier, but you can highlight them very quickly. Monitoring and alert features allow you to adapt quickly, which will make your customers happier. You will be better able to adjust to changes, and update customers on shipment status, product availability, recalls, or any other errors that may occur. This improved communication will go a long way in boosting customer retention.
Benefits of Supply Chain Visibility
In summary, here’s what supply chain visibility can do for you:
- The ability to access vital information instantly
- Enhanced process efficiency in terms of end-to-end business processes
- Customer demands addressed through real-time visibility
- Transparency and the ability to view “blind spots”
- Optimized logistics and transportation efficiency
- Improved responsiveness to customers
- More efficient handling and execution
- Reduced labour and material costs
- Efficient stock management
- Improved business metric monitoring and outcomes
Get Supply Chain Visibility with Lean Supply Solutions
If you want to find out, in real-time, where your goods or freight are as they travel from your suppliers or to your customers around the world, supply chain visibility is vital. There are many benefits of using a single software system to track and monitor your processes, and a third-party logistics provider can help you. These companies have a full inventory of services that can manage your operations from start to finish. The high standards of customers and their increasing demands means you cannot slip in regards to the services you provide. With the help of a 3PL partner, you will be able to meet these demands while boosting efficiency and save on costs.
Lean Supply Solutions can help you if you are looking for a logistics partner with the latest technology in supply chain visibility. We are aware of the rising trends in the industry and always strive to stay up to date. We commit to awareness of our clients’ operational challenges as they arise and help them get the most out of their processes. Our 3PL, packaging, and supply chain management services can streamline your processes for better success, and by striving to ensure that the right products are provided to the right customers at the right time, we can offer consistent, accurate, and quality results. If you’re considering upgrading your business by working with our 3PL distribution team, contact us today.
- Published in Blog