How to Optimize Your Supply Chain

It seems like every day the supply chain ecosystem becomes more complex. that’s partly due to the increased visibility into the supply chain that we get from technology, the fact that it’s more process-driven due to the need to minimize costs, and that it’s become a higher priority for successful business management.

So optimizing your supply chain sounds like a great idea. But just how do you go about it?

How Much Supply Chain Optimization Do You Need?

Just in case you don’t know your supply chain’s efficiency, a basic test is to look at back orders from your suppliers, stock-outs in your operation and shipment delays to your customers.

Of course, unusually high levels of any one of them can be a big red flag signaling a weak link in the chain.

But even if there are no back orders, no stock outs, and your customers are flush with inventory, your supply chain might still need to be optimized, because you may be able to get it all done for less cost.

And even if you have minimized costs, the nature of a truly ‘end-to-end’ supply chain means your immediate supply chain is just one part of a longer, end-to-end supply chain that can affect your company’s ability to meet customer demands too.

Tips for Optimizing Your Supply Chain

That last point is our first tip to optimizing your supply chain, including your end-to-end supply chain.

1. Manage Your Tier 2 Suppliers

Who are your suppliers’ suppliers? Their ability to keep your suppliers in stock, for the lowest cost, has a huge influence on your business.

Tier 2 supplier management starts with finding out who supplies your suppliers, what they supply, for how much and what are their lead times. Negotiating with tier 2 supplies can lower your supplier costs and yours too.

2. Focus on Your Company’s Core Strengths, Outsource the Rest

While the gig economy might not quite have reached the corners of every industry, we can all take lessons from it. Instead of maintaining in-house infrastructure and expertise to manage every operation in the business, companies should consider outsourcing non-core activities, including transportation, warehousing, and even your supply chain management.

3. Go Global, Think Local

Even if you feel your business isn’t big enough or not ready for international suppliers and markets, it is. And your supply chain is ready to go global too. A supply chain limited by geography might never be optimized. But, while going global, your local receiving and delivery must be in peak operating efficiency too.

4. Go Mobile

Technology is the great liberator of your sales force. Never before have they been able to spend so little time on paperwork and waiting for responses from head office. And that means more time than ever before acquiring and retaining customers.

5. Have a Responsive Supply Chain

Increased data visibility, shifting customer demands, natural and manmade disasters. They all have one thing in common. They are indicators that your supply chain must be responsive to stay optimized for many different market and supply conditions. Think redundancy and multi-channel supply chains.

To learn more about optimizing your supply chain, contact us here at PiVAL.