Optimizing supply chain management is no longer just a mere business function. It is a vitally important business process. Manufacturers and producers miss out on substantial profit potential by overlooking key steps to simplify, shorten, and optimize. Paying special attention to supply chain management is the best way to meet your customers’ needs on their timetable for the least expense. This is what you need to know to maximize the potential of your end-to-end supply chain.
Optimizing Supply Chain Management Crucial for Global Economy
Logistics and supply strategies have drastically changed in recent years. Indeed, suppliers and raw materials can now be sourced around the globe to ensure maximum efficiency. And delivery and sequencing strategies are enabling minimal inventory and turnaround times. Hence, the potential for falling behind the competition is higher in a today’s broader market. As stated by the Indian Institute of Materials Management:
Companies are going truly global with Supply Chain Management (SCM)… Companies have changed the ways in which they manage their operations and logistics activities. Changes in trade, the spread and modernization of transport infrastructures and the intensification of competition have elevated the importance of flow management to new levels.
Today, new trends are emerging in this global economy. And among these trends:
- Best-in-class supply chain management now emphasizes the importance of supplier relationships.
- Customer-driven supply chains are now the norm, with higher customer expectations, shorter lead times, and more complex specifications.
- Performance and efficiency are becoming the primary focus for optimizing supply chain management.
How to Optimize Your Supply Chain
- Establish Supply Chain Team Members: It is crucial to work with professionals highly trained and competent in optimizing supply chain management processes. This can be in the form of a council, new executives, or even by hiring a firm that specializes in supply chain management.
- Develop Relationships with Tier 2 Suppliers: It pays to understand your tier 2 suppliers, their lead times, products, materials, and costs. Because this information allows you to negotiate better rates for your suppliers.
- Communicate with Suppliers: Communicating demand to your suppliers enables them to manage inventories better. In turn, this cuts costs, thus optimizing your supply chain management in reducing supplier overhead and inventory storage and transportation.
- Implement Lean Logistics: Lean logistics emphasizes pulling products through the process rather than pushing products through. Therefore, this focus reduces waste and places the emphasis on the customer’s demands rather than the company’s products.
- Use Technology: Tracking and tracing are not enough. So utilize supply chain execution technology to provide oversight of the entire cycle – from managing customer demands to sourcing the right materials to assembling the products in a timely fashion. Simply put, manually driven processes do not provide enough oversight to allow for optimizing supply chain management today.
- Compress Cycle Times: Again, the length of your production cycle is directly related to efficiency and profitability. This cycle extends from the identification of a need to the satisfaction of a customer order. So as supply lines get longer, the potential for waste, complexity, and inefficiency becomes greater. Undoubtedly, the challenge to compress cycles is difficult yet essential to the profitability of your end-to-end supply chain.
- Collaborate for Strategic Supplier Selection: Companies are now collaborating with one another to source materials and inputs strategically. And this enables the suppliers to meet customized demands in an efficient manner that may not have been possible otherwise. Indeed, strategic supplier selection has many benefits and aspects, and is at the heart of optimizing supply chain management.
Discuss the unique challenges of transforming a global procurement operation and how to mitigate those challenges to avoid roadblocks with procurement leaders from JPMorgan Chase, Pfizer, Thermo Fisher Scientific, and The Hackett Group. Check out the “The clock is ticking on digital transformation” on-demand webinar.