Seven Ways to Optimize Your Supply Chain
For any supply chain manager, efficiency and optimization are key in order to run a successful business. In fact, nearly 80 percent of companies with efficiently operated supply chains achieve revenue growth at a higher rate than other businesses within their industry.
Are you taking any measure possible to ensure your supply chain is operating at its full potential? There are several things a supply chain manager can do, short term and long term, big and small, to optimize their supply chain.
Check out these seven tips to enhance and optimize your supply chain!
1. Establish and Cultivate Relationships
There are many “links” along a supply chain, and if one link is “weak,” it can be detrimental to the overall health of the supply chain . It is very important to establish and maintain good working relationships with your suppliers, shipping outlets, and customers. Communication is a key aspect of this relationship building, as two-way communication between a buyer and seller is imperative to overall supply chain efficiency. A mutually beneficial relationship will not only help improve effectiveness but will also help resolve conflicts quicker, should one arise.
2. Forecasting and Advanced Planning
To optimize a supply chain, it’s important to be proactive rather than reactive. If you’re able to forecast and anticipate sales with a little advanced planning and research, you’ll be able to respond faster to consumer demand, and organize your inventory in a way that is cost-effective. You can use data including seasonal trends, past sales, and social media information to identify current trends in order to “get out ahead” and optimize your logistics plan.
3. Supply Chain Sustainability
More and more supply chain consultants are going “green” in an effort to optimize their supply chain. Whether it’s investigating new forms of packaging to eliminate excess packing materials (and the cost associated with said materials) and ensure efficient packing, the use of alternative energy forms to cut costs in warehousing, or creating “smarter” transportation routes in order to minimize fuel costs while maximizing efficiency, going green is a way to enhance productivity along the supply chain. There is also the added benefit of consumers supporting businesses that practice “green initiatives.”
4. Effectively Manage Your Inventory
Do you know exactly what’s in your inventory? If a customer orders a product, do you have enough to ship? Do you have too much of an item that’s been sitting on your shelves for months? Without an effective (and accurate) inventory management system, your supply chain will not be optimized. You should be performing regular inventory checks to ensure you have the supplies you need to fulfill demand.
On the flip side, if you have too much inventory that’s been on the shelf for a while, it’s occupying valuable shelf space that could be used for other items. By effectively managing your inventory, you will ensure the supply chain will be operating at maximum efficiency.
5. Improve Supply Chain Efficiency
While it might not be financially feasible when first starting your business, another option to improve your supply chain efficiency is through horizontal or vertical integration.
Horizontal integration involves acquiring or merging with another business in the same industry, that operates in the same “level” of the supply chain that your business operates. For example, if your company produces paper products, acquiring or merging with a business that produces similar products can make you more competitive in the industry. Through this process, your customer base could grow, and steps could be taken to enhance the production of your paper products, optimizing the supply chain.
Vertical integration involves merging with or buying out a different “link” ahead of or before your organization in the supply chain. It can also involve developing your own capabilities for handling more links of the supply chain, anywhere from procurement to delivery. With fewer links in the chain, there will be fewer steps from start to finish, allowing your supply chain to operate at maximum efficiency.
6. Utilize Advancements in Technology
In this day and age, technology is a major asset when it comes to supply chain optimization. Artificial intelligence (AI) and machine learning are two technological advances that logistics managers are currently utilizing to ensure that their operations are running in an efficient manner. Both AI and machine learning eliminate the possibility of human error along the supply chain and free up that same “human” power to potentially work on another task within the supply chain itself. While the financial costs upfront might be higher, they will balance out in the long run, as technology can perform the task previously performed by a human being, only without the added cost of a salary.
7. Continue Evaluating
While you might think your supply chain is fully optimized, there is always room for improvement. You need to constantly evaluate your supply chain processes to see if anything can improve. Will a new supplier get you goods faster than your current supplier? Will changing packaging allow for more efficient shipping? Where should I place my new distribution center? How do I configure the right amount of inventory in my warehouses? By continuing to evaluate and enhance your supply chain, it will only get more and more efficient and more profitable.
Are You Ready?
Do you think you have what it takes to help business owners optimize their supply chain as a logistics franchise owner? Click here to get started and see if a Nexterus franchise is right for you!