Your Guide to Supply Chain Efficiency

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The Definition of Efficient Supply Chain

Supply Chain Processes & Improving Supply Chain Performance

Your supply chain is the key to your business. An efficient supply chain helps everything move along smoothly. Your supply chain accounts for all activities involved in manufacturing, transporting, storing, and even accepting returns of your product. Even if you’ve already got an efficient supply chain, there are almost always areas for improvement.

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Supply chain efficiency is defined as using elements of supply chain management, like technology, experts, and analytics, to make your supply chain as efficient and smooth as possible. Efficiency is important. It helps you save time and money.

When customers can get their orders quickly, they may be more likely to order in general, giving you more opportunities for sales. So not only can you save money in your overall costs, you may make more money too.

Finally, an efficient supply chain is less wasteful. It helps you retain unused materials and reuse them in your supply chain to avoid waste. This is not only good for your bottom line, but also good for the planet.

Ways to Improve Supply Chain Efficiency and Effectiveness

There are several ways to implement supply chain improvements for goods and services.

Transparency: Getting greater visibility of what is happening in your supply chain is step one for any improvements. To do this, you must use a powerful supply chain management system, usually consisting of a transportation management system (TMS), inventory management system, and a warehouse management system (WMS). This portal can give you access to powerful analytics and reports. Using this management software tool, you can make data-driven changes to your logistics plan to tighten up the supply chain.

Communication: Having open communication with your supply chain partners means there are less likely to be surprise delays. Check-in with them frequently to make sure things are on track. That way, you will find out about any problems well before they happen so you can account for them.

You also need to communicate with your teams on the ground. For example, you can ask your warehouse staff how things are going and if there is anything that could be done to improve the processes there.

Cultural knowledge: If you have foreign supply chain partners, learn about that country’s holidays and times off work. For example, some factories in China close for weeks around the Chinese New Year holiday. Knowing when that holiday is and how long your factory plans to close can help you prepare ahead of time so there are no gaps in your business.

Automation: Some companies use automation with things like order picking or packing to help reduce wait times and errors and improve customer service. However, even these automated processes require some human oversight. Because automation can be expensive to implement, smaller businesses often outsource these processes to 3rd party logistics providers (3PL) who already have the infrastructure to provide these efficient services.

Outsourcing: Beyond automation, outsourcing is a great way to improve the supply chain process. Some companies even outsource the entire logistical planning process to a 4PL (4th party logistics) provider. That allows the business to focus on what it does best, and leave the logistics to the experts.

Go green: The same things that are good for improving supply chain performance are also good for the planet! You can use a method called SIOC packaging which strives to reduce the overall packaging materials used. It is good for mother earth and your company’s bank account.

Continuous improvements: Once you implement a supply chain plan, it’s never just “set it and forget it.” You need to check analytics and reports consistently to make changes when needed. This is another area where partnering with experts who know all about supply chain best practices can come in handy.

How to Measure the Efficiency of Supply Chain Processes

The best way to track cost effective supply chain management is through technology. Using the previously mentioned logistics software that includes a TMS and WMS, you and your logistics partners can both access essential information that will let you know how your supply chain is performing. These reports should include elements of supply chain management including inventory data, cost per unit, shipping information, and highly specific cost data.

Set targets for each different metric. If you are meeting your targets, that means you have an effective supply chain. If not, you probably need to adjust your plans. Working with companies who are experts on supply chain processes can help you to measure efficiency because they know exactly what to look for.

Examples of Supply Chain Improvement

One of our recent success stories is a great example of improving the supply chain and the results greatly impacted some of our retail clients in a positive way. During the past two years, supply chain disruptions have become commonplace due to shipping delays mostly caused by port congestion. This affects a lot of international freight and slows down delivery times.

We came up with a plan to decrease delays by contracting with a local storage yard near the necessary port. We stored containers there until they were ready for unloading. This allowed us to get our container out of the port as soon as possible, avoiding hefty fees and giving us more control over the timing. This allowed our retail partners to keep their shelves more stocked, giving them a competitive edge.

What Does Operational Efficiency Mean in Warehousing?

Operation efficiency is basically an equation. It measures profit versus operating costs to see how efficient the business is. When it comes to warehousing, making an efficient layout, using the best technology, and streamlining processes can all help to make the warehouse more profitable.

One way to improve operational efficiency in warehousing is to invest in your personnel. Some warehouses try to skimp on employee wages and benefits, but that leads to high turnover, high training costs, and lower operational efficiency. Investing in talent leads to efficient experts who are loyal to your company and want to help it succeed.

Contact us to find out how we can help your business improve supply chain efficiency.


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