There’s a very easy way to know if you need supply chain optimization. Here it is: every supply chain, no matter how well-oiled and efficient it is, needs optimizing. Did you optimize your supply chain last year? It needs optimizing now. Have all the latest mobile, real-time, GPS-tracking technology? Your supply chain needs optimization.
Leading supply chain managers know that keeping the chain in peak condition isn’t a one-time thing. It is a constant pursuit.
How to Optimize Your Supply Chain
Entire books have been written on improving the supply chain, so we’re not going to cover everything here. But the following tips will give you a good start.
- Internal Inventory Management – If you can’t say exactly what is in inventory right now and exactly where it’s located, you need to improve your inventory management system. Not having a crystal-clear understanding of inventory, from raw materials to finished goods, can cost you in a number of ways.
- Demand Planning – No supply chain can be optimized without demand planning. Forecasting your customer demands is key to managing your inventory levels and reducing the costs of doing so. Accurate demand planning avoids costly overstocks and potentially costlier stock-outs.
- Supplier Inventory Management – Your suppliers are partners in optimizing your supply chain. Open communication between you and suppliers allows the exchange of information relating to customer demands and inventory levels to further reduce the chances of being caught without stock, or incurring costs around maintaining extra stock.
- Integrated Systems – An optimized supply chain lets your sales force place orders confidently knowing the orders can be filled. It also lets you accurately schedule employees and production. Order fulfillment and accounting will also be less burdened by back orders and delays. But to make sure you get full advantage, your systems must be seamlessly integrated to reduce re-entry of data and the errors that can cause.
If you enjoyed this post, check out our recent article on how can a supply chain reduce waste.