Effectively managing your supply chain is hard — especially if it’s still in the recovery phases from COVID. However difficult, it’s a critical business process that is a key determinator in customer satisfaction.
To stay competitive, or to even stay afloat, businesses must optimize their supply chain with a focus on execution-oriented applications and real-time decisions. They must embrace technology like blockchain, AI, and IoT to improve efficiency and performance. It won’t be done overnight, but it’s worth the effort.
If you’re wondering what the real payoff is behind taking the time to optimize your supply chain, we’ll give you four reasons. If you’re not already using a supply chain management system, that’s your first step toward optimization. Use our SCM Product Selection Tool to get a shortlist of products that will fit your needs.
1. Improved quality control
In SCM, the rule of 10 refers to the theory that the cost to replace or fix an item increases by tenfold at each step of the progression due to poor quality. Poor quality is typically a consequence of finding the cheapest option possible.
To stay competitive, quality control is crucial, because customer expectations are very high. Focus on quality when optimizing your supply chain. We challenge you to step away from finding the cheapest option, as improved quality won’t only affect you, but also your direct suppliers and your supplier’s suppliers.
“An optimized supply chain produces better quality products by allowing companies to vet not only their direct suppliers but also their secondary, and even tertiary, suppliers, giving them more control and allowing them to implement regulations further down to meet specific criteria, ensuring that the highest quality product is always achieved.
Having this level of control also allows businesses to conduct periodic audits and request documentation as needed to ensure that everything is in order and that everyone is in compliance,” says Michael Knight, Co-Founder and Head of Marketing at Incorporation Insight.
To improve quality control, consider monitoring these key performance indicators:
- On-time delivery
- Scrap rates, reworks, and similar issues at your suppliers
- Quality of product the customer receives
- Cycle time for resolution of customer complaints
- Supplier quality assessment with major and minor findings
2. Higher efficiency rate
There’s a lot of benefits to using real-time data in supply chain management. It resolves pain points at strategic, operational, and tactical levels and improves decision making for virtually all activities across the supply chain.
The combination of mobile computing, analytics, and cloud services — all powered by the Internet of Things — makes it easier to understand where goods are, how they’re being stored, and when they can be expected at a location.
Making the shift to and embracing digital transformation promises to reduce inefficiencies while improving flexibility. This is a recipe for improved resiliency, which if we learned anything from COVID, it would be that resiliency is the name of the game.
Using a SCM tool that leverages big data and AI like ThroughPut will increase efficiency by keeping inventory at optimum levels, improving your lead times, and giving you end-to-end visibility. Running from the digital revolution will only set you behind the curve and create more work in the long run as your company struggles to keep up.
3. Better flow of materials and information
In the supply chain industry, the shorter the time between manufacturing a product and getting it out to the customer, the better. Optimizing will strengthen the flow of information, materials, and products across your entire supply chain, including last mile transportation.
Last mile delivery refers to the final step in the supply chain when a product transfers from a business to its final destination. Organizations should focus on making this step as quick as possible, as the evolving market and demand for a convenient customer experience is ever increasing.
Every stage of the logistics process is important, but last mile delivery should be high-priority. Customers are looking for speed, timeliness, accuracy, and precision of the product delivered to them. To optimize your last mile delivery process, here’s a couple of tips:
- Input orders and tasks into a centralized system, such as SAP SCM
- Optimize task dispatch and routes
- Sort out packages marked for local delivery
- Support customer visibility and engagement
4. Lower overhead costs
An effective supply chain should not solely focus on finding the cheapest options, because when that happens, quality suffers. However, optimizing the chain will result in lower overhead costs.
Chris Campbell from The Charming Bench Company says that supply chain optimization helps a company maximize profit.
“The goal is to minimize unnecessary expenses in operational areas like production, logistics, and payments.
Optimizing your supply chain increases the level of control you have over your expenses. It maximizes, or attempts to, cost areas. Effective SCO can lower overheads and reduce staff costs.
There are a number of techniques to optimize your supply chain. Many of these rely on complex mathematical models and algorithms and require a specialist to implement. These methods are all similar in that they aim to reduce expenses in production and distribution while maximizing gross profit on products.”
Optimize your supply chain with a SCM tool
Improving your logistics won’t be done in a day or a week, but it is worth the hassle. To make the hassle easier, look into a supply chain management tool. For recommendations unique to your needs, use our Product Selection Tool for SCM or give us a call at 877.702.2082.
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