If you know anything about supply chain management, you already know how vital it is to run your supply chain efficiency. We’ve discussed this very thing in our article on logistics management. There’s a lot of working pieces to a supply chain.
Supply chains have multi-levels and can give your company a big competitive advantage over your competition. In order to improve supply chain management efficiency and effectiveness, companies must be able to;
- Improve Reliability
- Improve Predictability
- Optimize Costs
- Mitigate Risk
- Analyze Data
When companies can strategically improve in these areas of the supply chain, it can create a momentum wave in your business. A successful supply chain is one that helps businesses save money, faster delivery time, improved customer service, shorter factory processing time, better inventory management and the list goes on.
What Is Supply Chain Efficiency?
Let’s get back to the basics. Supply chain efficiency is an organization’s core standard of performance as it pertains to their supply chain.
Efficiency measures the ratio of work performed in a process of some type, whether the process is using best practices or using the best resources. Due to this, supply chain efficiency doesn’t always guarantee effectiveness. A supply chain might efficiently reduce costs, but if the end consumer is unhappy with the product, it is ineffective. Now that you know that, an effective supply chain focuses on the outcome and external standards, AKA “results.”
Well-built supply chains can do a lot of great things, such as improving margins, expansion and growth, increase positive consumer experiences and reduce your operating costs. Determining the best way to move a product to its destination takes careful planning of optimizing order processing, receiving procedures, outbound schedules and reverse logistics.
Distribution Networks In Supply Chain Efficiency
A distribution network is a system a company uses to get products from the manufacturer to the retailer. Companies that are able to leverage the supply chain as a strategic capability have the ability to create a durable distribution network. As you likely know, a quick reliable network is a competitive advantage because customers are able to get products whenever they want them. It makes your company shines and customers love having that option, it’s a win-win for everyone involved.
Today, the trend is for distribution centers to be located close to major markets in order to reduce inbound and outbound miles. Every company choose location based on strategic research. Having the ability to get products to customers within 24 hours is the future. Today, that shipping option is available and those companies are reaping the reward.
How To Improve Supply Chain Management Efficiency?
For a supply chain to be efficient, companies must create reliable transportation solutions.
A transportation network empowers a company to reduce shipping costs and increase customer service levels. The good news, they can do this with little disruption to any processes. An effective transportation network starts with shipment visibility. Visibility improves routing, capacity and profitability.
This is exactly why you see a lot of shippers working with 3PLs (Third-Party-Providers) to explore new transportation solutions. The data and stats prove how effective a 3PL company can be. 75 percent of 3PL users say 3PLs provide new and innovative ways to improve logistics effectiveness. The most frequently outsourced logistics activity is domestic transportation (80 percent). Regardless of what mode is used or freight volume, 3PLs do have a lot to offer a company.
If you’re a shipper, you should be thinking about analyzing the existing supply chain processes, distribution network, and transportation solutions in your supply chain. Looking at current and predicted delivery lead-times, logistics expenses, and inventory assets are good data points to find a path to efficiency and effectiveness.
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