Supply Chain Optimization
Working to identify and immediately triage these pain points should be a top priority for all companies. The following 3-step process has proven to be an effective way to handle these common pain points and get to supply chain optimization:
1. Diagnose Pain Points
The first step in the healing process toward supply chain optimization is to diagnose the pain points – large or small – and determine how they are hurting your supply chain’s overall optimization. One of the best ways to do this is to have a supply chain engineer break your supply chain down, layer by layer. Most supply chains consist of the following segments or departments:
It’s imperative to be thorough and break down each layer, process by process, and person by person. It can be beneficial during this process to have the assistance of an experienced supply chain engineer.
2. Identify Solutions
The next step in the process is to identify solutions. Supply chain solutions are identifiable in many ways, including:
You are identifying pain points in your distribution and transportation networks allow you to reassess your entire supply chain and align it for success. Engaging a third-party provider or supply chain consultant with engineering expertise can help you properly optimize your supply chain to meet your most crucial supply chain goal – getting your product to your customers in the right time, at the correct cost.
Lean action workouts – A great way to identify low hanging opportunities for improvement, or deeply rooted issues within a warehouse, is to do a Lean action workout. These workouts focus on operational, safety, and quality aspects within a distribution center. When done correctly, they have a sustainable bottom-line impact—and drive improvements in workplace culture.
Embrace technology – leveraging an advanced warehouse management system will allow your company to troubleshoot pain points with planning and forecasting by enabling you to understand product cycles better and therefore ensure your product flow is smooth, inventory costs are in check, and space is effectively used.
Be sure to ask yourself these crucial questions about your WMS to determine if it’s up to par:
- Does my WMS allow me to forecast, plan, and anticipate peak times of demand?
- Does my inventory and order management data give me real business intelligence?
- Do I have inventory visibility that helps me make decisions upstream and downstream in my supply chain?
An underperforming WMS can cause severe damage to a supply chain, which is why we recommended a Tier 1 platform capable of providing better visibility and management of product inventory, as well as additional insight on warehouse labor, space utilization, workflows, equipment requirements, and even accounting.
3. Implement for Success
Once you’ve conducted your study, done your Lean action workouts, or leveraged technology, now it’s time to implement with measurable action plans. To measure is to know, and without measurement, you cannot manage toward a successful supply chain.
There are three levels of metrics that should be looked at to achieve supply chain success:
Operational metrics – measure how well a provider is handling the day-to-day within a distribution facility or transportation scenario. They can include order accuracy, inventory accuracy, and lines picked per hour.
Tactical metrics – measure a providers’ performance against Key Performance Indicators for the client. Tactical metrics can include order cycle time or speed to shelf measurements in the retail industry.
Strategic metrics – measure how well the 3PL warehousing and distribution are operating as partners with the client. Is the supply chain driving value, and ultimately optimizing costs for the client? Is the client able to meet or exceed sales targets as a result of the relationship?
These metrics should be visible and meaningful across a supply chain and embraced by leadership. When company leaders live by these metrics, the culture becomes one where employees thrive on driving continuous improvement within the supply chain.
A strategic supply chain optimization in the service industry does the following:
Helps to develop new service with focused supply chain management tools and processes: Businesses integrate procurement processes and their enabling technology with other enterprise applications to help expand the ecosystem and increase control-related project development, cost estimation, budgeting, and financial management.
Reduces costs: For instance, in banks, the supply chain involves all the distribution channels where cash is held and through which customers transact, such as ATMs, branches, mobile devices, net banking, and agent outlets. Banks need to monitor transactions at these locations and leverage modeling to forecast requirements and plan the logistics for distribution of cash and other transactional devices. Doing this can reduce costs and optimize service levels.