Optimizing your supply chain can generate a sizable competitive advantage for your company if done properly. Supply chain management is the art of refining your existing supply chain so that it works at its utmost potential. This means finding efficient ways to align your logistics, production, shipping, and inventory so that you can achieve the most efficient overall process for your particular operation. Keeping your entire supply chain operating at maximum capacity will allow you to provide your customers with the best possible products at the best possible prices.
There are many methods for evaluating logistics and supply chains, but one of the best is to evaluate them according to the latest Best Practices of Supply Chain articles. Supply chain management begins with demand forecasting, which is basically a method of predicting how much stuff you will need in order to service all of your customers at once. By closely observing what kinds of products your customers are buying most of the time, you can gauge how profitable those products are for you. Demand forecasting, in combination with other methods such as demand forecasting analysis, can give you a good picture of how your business is performing relative to market trends.
Another key area to cover when you are optimizing your logistics and supply chain is quality assurance. If you produce goods that cannot meet the expectations of your customers, then you are not only damaging your own reputation within your industry, you are also damaging the reputation of every other supplier that you work with. The most profitable, long-term businesses are those that are highly successful in satisfying customer wants and needs, while minimizing their operating costs. To do this, you need to closely monitor your suppliers’ performance, both in terms of products and operating costs.
An additional area of supply chain management to pay attention to is your batch production cycle time. As your customer demands change, it’s important to make adjustments as necessary to keep your customers satisfied. For example, if you find that your packaging requirements have changed but you know that the goods you’ve ordered from your main supplier won’t experience any significant increase in cost, then you might consider increasing the batch size of the items you’re ordering. However, if you discover that unexpected changes in transportation or shipping costs are going to cause your product to incur significantly more shipping costs than you originally anticipated, then you may want to reconsider the packing amount.
One of the final areas we will discuss in our discussion of supply chain management is physical flows. Physical flows refer to the paths your goods take from point A to point B. These include not only travel time, but also information flows, such as the distance from your supplier to your factory or office and back again. While physical flows are fairly easy to measure, they can be difficult to interpret. Information flows, on the other hand, tend to be much easier to analyze and visualize. The challenge with information flows is that even if you are able to observe a certain trend, you may not always be able to pinpoint why that trend exists.
In order to improve the quality and consistency of your production process, it is important that you work with experienced supply chains. Supply chains should not only allow for timely delivery of goods, but should also work to prevent inefficiencies in the supply chains process. Best practices for supply chains management include the use of advanced warehousing planning technologies and the adoption of policies and procedures which are based upon the specific nature of each company’s business model. By identifying and addressing issues which can negatively impact your business, you can ensure that your company becomes an effective and profitable enterprise.