How to Complete a Supply Chain Analysis in 5 Steps

Business leaders are always looking for ways to improve their business and help it grow. One of the best ways to achieve your goals is to examine your supply chain and find opportunities to improve efficiency, performance, and profitability. Much of supply chain optimization is about data, and in order to ensure maximum profits and productivity, the data along the links of your supply chain must be analyzed. But how does one complete a supply chain analysis?

Step One: Map Out Your Supply Chain

To identify the weaker links of a supply chain that could be strengthened, it’s important to first establish a map of the entire supply chain. This allows a supply chain manager to identify all of the people, resources, information, and activities involved in the supply chain.

This map can be designed as a flowchart, which provides a full overview of the chain, the flow of products and materials, the level of communication between the links of the chain, and how the products and materials are transferred between the links. Or use Network Modeling software to establish a baseline of the “as-is” supply chain. Then begin modeling/simulating changes (growth, new markets, new products, new warehouse placement, etc.) While supply chain management has been slow to adapt to more modern technologies, the industry is slowly but surely adapting with advances in technology along the chain.

Step Two: Analyze the Market

Odds are, your supply chain isn’t the only one that’s producing the goods you’re providing. By analyzing the market, you’ll be able to understand how pricing works for the raw materials you need to buy and for the goods you’re trying to sell. Are the materials seasonal? What are the prices that others are paying for materials, labor, transportation, and overhead costs?

By comparing yourself to others in the space, certain indicators including price indices, employment rates, and other economic factors, you’ll be able to better understand the current state of the market. When tracked over a period of time, these indicators can become predictors of what’s to come.

Step Three: Determine Inefficiencies Along the Chain

Once the supply chain is mapped out and the market has been analyzed, your supply chain should be assessed at every level from sourcing to final product delivery. For example, if raw materials are all being sourced from multiple locations around the country, or even the world, is that the most efficient way to get these supplies? Is there a more cost-effective way to secure these resources for production? Can a product arrive at a store earlier, making the company more money? Is it possible to lower overall shipping costs or shave a few days off of shipping time by consolidating sources?

All of these are questions that should be asked while analyzing a supply chain. An optimized supply chain is one that operates with a company’s financial bottom line in mind. A few cents saved on certain aspects of logistics can add up over time, saving the company money. This is why performing a supply chain analysis consistently is important.

Step Four: Adapt

If you’ve made changes in your supply chain, you need to adapt to the new procedures quickly in order to succeed. Consumer demand can change on a whim. Markets evolve quickly. To continue to make a profit on your goods and services, you have to be ready to anticipate this evolution.

Step Five: Repeat

Do you think you have the ideal supply chain strategy? A supply chain is constantly evolving, and while you may think your supply chain is running as efficiently as possible, it is important to continue completing supply chain analyses regularly, to ensure that you’re operating at maximum profit and productivity.

Global supply chain management is one of the fastest-growing areas of franchise consulting. Consultants who understand the value of strategic supply chain analysis and have the knowledge and experience to use data to solve a company’s logistics needs are in high demand. Are you ready to get started as a Supply Chain Executive? Click here to learn more about the Nexterus supply chain services franchise opportunity.