5 ways to Optimize Supply Chain Performance

Supply chain management (SCM) is what enables businesses to put products in customer’s hands from the moment they are dispatched from factory floors or warehouses. For an omnichannel business, it is the backbone that helps attain a competitive advantage.

The SCM spectrum that spans from procurement to delivery is complicated and subject to volatility at any stage. Changes in customer preferences, shortened delivery spans, clogging of delivery routes, lack of internal competencies, etc., can all create issues with SCM – so how can you help your supply chain remain agile and competitive? In this blog, we explore several proven ways to enhance the performance of your supply chain.

Forecast Inventory Demand

This is the era of predictive analytics and your data holds more power than you know. Put this data to work and unearth insights about how your inventory management has worked in the past and the process tweaks needed to improve it. Investing in real-time inventory forecasting tools will help remove the uncertainties in planning for inventory procurement, warehouse storage and distribution.

Digging the data would also help you forecast inventory demand better. Accurate inventory forecasts will lead to well-planned procurement and logistics operations, which will turn your supply chain profitability into a bright green.

Real-Time Stock Visibility

According to Bain Research , the value of merchandise ordered with same-day delivery has increased 40 times. What used to be a $100 million business is now pegged to be $4 billion. If retailers do not sharpen their supply chain edge, they will have to miss out on a significant volume of sales. Moreover, there is also the impact of a negative reputation as a result of dissatisfied customers.

There is one solution to permanently address this challenge – real-time stock availability. Thanks to digital tools that are available online, cloud-based inventory management solutions and also advanced ERP systems, retailers can now have real-time visibility of inventory levels across all stages of the supply chain. This helps move goods easily from one phase of the supply chain to another in response to customer demands.

Link Multiple Locations

If your supply chain touches base through multiple locations, it is better to optimize a single route that covers them all. Linking multiple locations will help minimize fuel and transportation cost per consignment. Also, it will also facilitate maximum fleet capacity utilization in your distribution network.

Supply Chain and Logistics Network Modeling methods like optimization modeling, simulation modeling and heuristic modeling help in creating an optimal logistic network. Delivery companies like UPS and FedEx have systems in place that help them deliver goods fast and profitably. Retailers can replicate their delivery mechanisms with the help of algorithms for finding the best match of pick-up and delivery points.

Drive Internal Cost Economies

Supply chain management is a mesh of several activities. In a way, it is not a standalone business function, but, an amalgamation of several companies and their efforts. So there are several cross-functional relationships that need to be established within the supply network. Establishing these cross-functional relationships will result in long-term cost benefits.

For instance, a fine process of procurement can be laid in place with a suitable vendor who knows how much quantity you will need periodically. This relationship can be linked to a third-party logistics partner who can scale the network easily.

Align Corporate Strategy & Logistics Strategy

Long point, short: Your logistics strategy should be aligned with your bigger corporate strategy.You can aim to be the most customer-centric brand, price-leader, product innovator, first-to-market or anything else – but these corporate objectives can be achieved only if your logistics strategy is also aligned with them.

Your objective to be a customer-centric brand can be achieved only if logistics is primed for super-fast last-mile deliveries. The first-to-market position can be reached only if the logistic network is designed with optimal routes that take shorter delivery time. By aligning your corporate strategy to logistics strategy, you will be able to measure its efficiency using common benchmarks. That helps optimize the supply chain for better performance. If it is managed as a separate entity from the corporate strategy, such performance optimization may not happen.

The Way Forward

In today’s omnichannel retail scenario, retailers need to advance their supply chain efficiency to achieve next-level performance. The robustness of the supply chain determines the success or failure of the retail business. Optimizing a supply chain is a challenging task involving several tough decisions, each of which could have a long-term impact in the way the entire supply chain turns around.

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