Supply chain optimization is the application of processes and tools to ensure the optimal operation of a manufacturing and distribution supply chain. This includes the optimal placement of inventory within the supply chain, minimizing operating costs (including manufacturing costs, transportation costs, and distribution costs). This often involves the application of mathematical modelling techniques using computer software.
The supply chain of an enterprise has become a complex ecosystem of people, processes and technologies.
In the past, internal IT systems were in charge, but as of late, a majority of supply chains have expanded greatly due to an increase in computer networks, Internet tools, and technologies over the past two decades. Such innovations have opened the door for true collaboration between customers, partners, distributors and suppliers.
Recent technological advancements, widespread usage cloud applications, social networks, and the presence of mobile technologies have presented significant challenges (and opportunities) for optimal supply chain management and real-time supply chain visibility.
Manufacturers have to invest in the evolution in order to stay on top of the massive movement in customer behavior and uprising expectations. This means optimizing the process, and maintaining an in-depth understanding of the new tools and best practices for supply chain management. This is a significant challenge for most manufacturers, because they can easily get “ripped off” in terms of IT related investments and speed to market. Manufacturers should be aware of the challenges and trade-offs that effect their increasingly complex, competitive and transparent supply chains. The optimized supply chain should stay lean, manage cost structure and listen /respond immediately to fluctuations in demand, even minor ones.
There is no playbook to ensure success in an incredibly dynamic global market, but these tips will help you to achieve and maintain supply chain optimization.
1. Focus on core business and strengths and outsource supporting functions
Many organizations try to do too many things. As the lessons of history have taught us, trying to accomplish too much on your own often leads to failure. Utilizing a specialized service provider yields better returns both in the short term and the long run. Such a strategy allows you to focus on your organizations core competencies, ultimately helping to grow business.
2. Improve data integration & collaboration in your value network for demand data and inventory management
This helps organizations reduce inventory, improve fulfillment rates and product availability at point of purchase and ensures a lean supply chain improving margins and profitability. Today, cloud data integration services provide the tools to collaborate and connect all parties cost-effectively and with agility.
3. Don’t forget mobility
Mobile technology helps increase sales, merchandizing and marketing, and it enables direct services to the consumer. A great example is a chatbot for cross-and upsell activities.
4. Develop a responsive supply chain
Utilize data such as POS sales, and social media information to identify trends and demand changes early enough and enable your supply chain to respond faster to changes in sales, improve customer and vendor service levels. This will help you optimize inventory to maximize true benefits.