Delivery volumes have never been higher, putting pressure on supply chains. Packages are being delayed, shipping companies have increased fees, and businesses – whether suppliers, wholesalers, or retailers – are all feeling the strain. Companies will have to change their operations to be more efficient, flexible, and cost-effective to fulfil the new demand. Supply chain optimization ensures a smoother operation and a more profitable business strategy.
Let's start by defining supply chain optimization, the various elements that go into it, and how the correct supply chain optimization approaches and solutions may help you support your major business activities and gain a competitive edge.
What is Supply Chain Management Optimization?
A supply chain is a web of companies, individuals, activities, information, and resources involved in creating and distributing a service or product to customers. The value chain starts with transforming natural resources and raw materials into a finished or service and ends with distributing that product or service to the ultimate customer.
The supply chain network design and optimization process allow businesses to optimize gross profits, reduce operating expenses, and ultimately create a successful customer experience by giving customers what they want, when they want it, where they want it, and at the lowest possible cost and highest profit possible, while balancing distribution, inventory, production, and transportation costs.
To better comprehend supply chain optimization, you must first understand the three key phases: design, planning, and execution/operation.
3 Phases of Supply Chain Optimization
The planning and management of your supply chain is a crucial component of your business. This chain has many diverse links that necessitate skill, coordination, and planning. When supply chain optimization is done correctly, it can reduce a company's overall expenses while also increasing profits. If one link fails, it can have a negative impact on the rest of the chain, which can be costly.
It doesn't have to be challenging to improve your retail supply chain. You can improve supply chain efficiency in a short period by combining technology and improved business procedures.
1. Supply Chain Design
Upper management makes strategic decisions about supply chain design, which are usually long-term and consider future predictions. At this point, it's critical to research the market. An excellent example of a strategic decision would be the location of a warehouse.
2. Supply Chain Planning
This phase is mainly concerned with market demand and supply, necessitating thorough market research. However, it's just as crucial to analyze competitors' demand-response techniques.
3. Supply Chain Execution/Operations
The final step of supply chain operations includes executing product flow throughout the whole supply chain. Internal and external processes should both be examined to optimize performance and effectiveness.
This phase covers everything from merchants getting products from manufacturers to brands making products themselves and assembling and testing products. It also focuses on last-mile logistics, such as receiving items for distribution to the local warehouse before sales.
When it comes to supply chain optimization, the goal should be to make it as customer-centric as possible. Customer-centric supply chains keep the eventual customer in mind every step of the process, especially when selecting a supply chain strategy and a technology solution to improve business processes.
4 Components of a Customer-centric Supply Chain:
- Tailored to the needs of the client
- Flexible and adaptable
- Reliable and transparent
Best Practices to Optimize Supply Chain Operations
Even if the major effort is to save supply chain costs or improve product quality, each of these qualities should inform any supply chain network optimization activities to guarantee that the result enhances customer service.
The primary business trends of today, such as low-cost country sourcing, outsourcing, customization, and globalization, all add to the supply chain's complexity. Despite this, most businesses have not modified this crucial aspect of their operations.
The supply chain has changed dramatically due to increased globalization and shifting customer expectations. Proven improvements must be performed to gain access to the growth and income of an effective supply chain.
1. Create a supply chain council.
Your supply chain will lack a defined strategy for efficiency if this isn't done. You may increase cross-functional communication and showcase the value of an organized supply chain by providing your supply chain with management and leadership, removing two typical hurdles to supply chain success.
2. Build a supply chain organization that is adequately staffed
Your supply chain must be managed and organized to be as efficient as possible. The best method is to use a centralized strategy implemented by management. When it comes to staffing your supply chain, you should prioritize strategy above transactional capability. Your leaders must use strong communication and relationship management abilities to advance this strategic thinking toward creating value.
3. Determine how technology can help to improve and streamline operations
Manual operations frequently cause a lack of supply chain transparency. This, as well as the unplanned nature of supply chain processes, can be solved via automation.
However, don't build your business procedures around technology. Instead, examine procedures that aren't meeting expectations to identify areas where technology could help, and then select routing software to meet those needs. You may more quickly access precise and comprehensive reporting data to inform the correct strategic planning and performance measures with the right technology.
4. Maintain positive ties with your suppliers.
The quality of your supplier connections is a crucial measure of success in this sector. These connections should be maintained and nurtured long after the deal is closed. The most exemplary supplier relationships are those in which the customer and seller communicate in both directions. Mechanism(s) to preserve the health of your connection, goals for continued improvement and value, performance evaluation, and a platform for dispute resolution should all be included in your objectives.
Working with the top courier service that promotes solid relationships is also a plus. They can build custom solutions for you and your suppliers and even accommodate last-minute demands like next-day deliveries or same-day services.
5. Consider the overall cost of ownership rather than the purchase price.
Get rid of the practice of selecting a provider solely based on pricing. Instead, learn about a product's or service's cost of ownership/consumption. Keep in mind that procurement is only one component of the total cost; other expenses include operation, warehousing, and shipping.
6. Choose your suppliers smartly
This is at the heart of good supply chain management, and you'll achieve even greater outcomes if you work together. Talent, technology, internal and external collaboration, and change management are essential components of a successful supply chain.
- Collaboration is necessary for success.
- Participate in the decision-making process with your suppliers.
- Obtain feedback from them.
7. Reduce inventory costs by optimizing inventory.
Inventory quantities should be optimized as part of supply chain management. Keeping and storing goods is costly. Forecasting and demand planning is required to optimize your supply chain inventory.
8. Regularly conduct reviews to ensure efficiency and to reduce hazards.
Your supply chain council and leadership team examine your procedures and policies regularly to ensure that they are up to date, efficient, and compliant. This will help you prevent problems like process bottlenecks and streamline your operations while lowering your risk of theft, fraud, and other concerns. There are a few essential procedures to follow to reduce risk in the supply chain.
You must identify all risk aspects, assess their likelihood of occurrence, estimate the financial impact of a problem, and prioritize any risks for suitable monitoring and prevention steps.
9. Establish some green efforts and be socially responsible.
It is no longer a viable option for your supply chain business to not want to decrease its carbon footprint actively; instead, if they are to thrive or even survive, they must move to be more sustainable and socially responsible. When deciding which suppliers to buy from or engage with, an increasing number of customers are evaluating their environmental impact.
10. Faster order fulfilment and delivery.
When it comes to logistics, all parties involved (suppliers, manufacturers, distributors, and retailers) must be on the same page for any process to run correctly. If effective coordination and supply chain optimization is implemented, this will immediately benefit other objectives. Reduced shipping costs, increased revenues and profits, and, of course, improved customer service are all part of the plan.
How Packlink Can Help You with the Supply Chain Process
Supply chains have become increasingly focused on the delivery aspect of their processes as customers have grown accustomed to receiving their products the next day—or even the same day.
Successful delivery can be defined as regularly bringing your clients what they need—in the correct amount, at the right time. Any manufacturing or distribution company now considers delivery the most basic demand. Your shipment tracking software enables you to optimize and streamline your supply chain processes to benefit both your company and your customers.
We can make shipping easy for you at Packlink. We can streamline the process from tracking shipments to sending parcels. We offer lower shipping charges than those obtained directly from post offices or traditional transportation carriers.