Supply Chain Optimization: Three Improvement Factors

In recent times, a lot of forward-thinking businesses have realized the importance of supply chain optimization. There is little point working to increase sales and generate more revenue if the profits made are simply being bled off by a supply chain infrastructure that is inefficient and costly to run.

Something else worth bearing in mind is that an inefficient supply chain may not only be costing the company a lot of money and reducing overall profits, but this inefficiency may be noticed by customers and annoy them to the point where they stop buying from the business – thus reducing sales and revenue and causing a double-whammy effect on the company’s bottom line.

Effective supply chain optimization is essential if a business is going the meet the expectations of its customers, have the right stock in the right place at the right time, and maximize its revenues while simultaneously controlling and reducing costs.

However, the modern supply chain is increasingly complex, often spanning multiple countries and continents, and including a lot of third-party suppliers in manufacturing, distribution, transport, etc.

Three things to bear in mind when thinking about supply chain optimization are:

1. Holistic approach. In the past, there was a tendency to look at each part of the supply chain in isolation, i.e. shipping arrangements, storage systems, etc. To be truly successful with supply chain optimization, though, requires looking at the bigger picture and constantly seeking ways to make the flow of goods from production to the customer’s door as efficient as possible.
2. Closer, more transparent relationships with suppliers and customers. Staying in regular contact with suppliers, understanding their challenges, helping them to solve them, and clearly communicating what you require from them, to which specification, in what quantity and by when, goes a long way towards ensuring a more effective supply chain.
3. Embrace new technologies. New and innovative technologies that affect supply chain optimization are being developed all the time, ranging from better software (warehouse management systems) to smartphone apps that allow warehouse managers and other relevant staff members access to supply chain data easily and in real time. This improves responsiveness and assists with spotting and dealing immediately with supply chain problems.