No matter how efficient your production line is, a missing or ineffective link in your supply chain can bring everything to halt. The smooth flow of raw materials from your suppliers has a very significant impact on your company’s bottom line. The faster and easier you get your raw materials, the faster you can make new products and meet your customers’ needs.
However, it is not enough for your supply chain to work. You need to optimize it to ensure that you are keeping your customers happy at the least possible cost. So how can you optimize your supply chain to achieve a better level of efficiency? Here are five strategies you can use.
Customer Demand Planning
One universal attribute of customers across the world is that they follow trends. These trends can be determined by seasons, popular opinion, events, news, etc., and they allow you to predict customer demands and plan for them. For example, cardigans and knitwear would sell more in winter while sundresses would sell better in summer. This is an oversimplification of the processes of customer demand planning, but it illustrates the main point: customer demand planning allows you to predict what your customers will order and when they will order it. This means you can prepare the right resources and products at the right time without redundancies. Proper customer demand planning requires constant and accurate acquisition of customer buying behavior data.
Inventory Analytics
Inventory analytics uses real-time data from your sales and marketing processes plus your other business processes to help determine the optimum volume of inventory needed at a particular time. One of the easiest ways to accumulate costs is through inventory and warehouse management. Keeping excess stock on hand brings excessive fees, the possibility of damage, higher overhead (keeping perishables refrigerated, for example), etc. Not having enough stock, on the other hand, means you can’t supply your customers with what they need when they need it. Therefore, you need to get as close to maintaining an optimum inventory as possible, by linking customer demand forecasts to supply data and current inventory statistics.
Responsive Supply Chain Design
A responsive supply chain provides you with real-time feedback on the efficiency of component parts of your supply chain, allowing you to track faults and optimize them in real-time. Building a responsive supply chain allows you to automate your tracking and reporting processes, creating a real-time stream of data reports that show you how your supply chain is performing.
Optimize the Supplier End of Your Supply Chain
A supply chain is not just the movement of products from you to your customers. It starts with the flow of materials to your suppliers from what is known as your Tier 2 suppliers, and then from your suppliers to you. This means there is a whole other end of your supply chain that you can optimize to reduce costs. Starting with helping your suppliers reduce their own costs (negotiating a single Tier 2 supplier for some of your suppliers, for example), to renegotiating deals with them to reduce your own costs (a reduction in cost over the years, for example).
Optimize Your Logistics
Logistics also represents a significant area for cost-reduction possibilities. While it is not possible to predict all the possible things that could go wrong with the delivery of a shipment to a customer, you can optimize the logistics to provide an optimum number of contingencies for unforeseen circumstances without redundancy. For example, creating a tracking system that allows customers to monitor the movement of their orders from warehouses to their locations.
Optimizing your supply chain is a very effective way to reduce costs, improve your bottom line and increase customer satisfaction by creating an efficient delivery pipeline that always gets them what they need when they need it and where they need it.
