As economic conditions worsen, organizations are stumbling on variety of customer demands ranging from superior services to lower costs. These extra requirements not only cause added strain on the organization’s supply chain, but makes achieving financial goals difficult. Already many organizations are struggling to respond to customer demands due to shrinking margins caused by competition and slack in supply chain.
Companies are looking at additional ways to
It’s not easy to uphold an excellent manufacturing organization. Poor manufacturing shows throughout the organization with unavoidable cost in areas of operations, customer service, and product manufacturing.
To overcome these issues, organizations have to react quickly to customer needs while maintaining low costs. To meet customer needs, organizations have adapted inventory optimization techniques. And depending on the nature of the business, optimization techniques could involve optimal stock levels or optimal staging.
Whether optimal stock levels or optimal staging is implemented, it’s necessary to use proper tools to evaluate information and optimize operations, which will help in making right decision at the right time. The tools could range from ERP system implementation to a standalone inventory optimization tool.
The supply chain of any organization starts and ends with the customer in mind; starting from customer demand and ending with delivery to meet the demand. The following are the key areas of supply chain network in most of the industries:
For the optimization of the whole supply chain network, each portion of the network needs to be performing at its highest level of efficiency. For example, customer demand is so volatile in today’s economic conditions that the organization needs to have a flexible system in place where it can move the demand inward and outward like a spider web. As the demand changes, the planning and the purchasing team needs to work parallel to each other to provide better lead times from suppliers and offshore vendors.
Many techniques can be used to manage the inventory, including a consignment process or vendor management inventory methodology. Doing so helps an organization focus on its core competency while the VMI provider manages inventory efficiently, and cost effectively. Another area where companies must show flexibility is in transportation, especially with fluctuating oil prices—many organizations are considering managing the transportation of inventory and finished goods through a 3PL.
Bottom line: optimization lies in the entire supply chain, not just in one piece of the puzzle.
Because information is critical to the performance of any business, companies (especially those operating with and within supply chains) cannot neglect the optimization of information. Information needs to be gathered, organized, and saved in one place for easy access and analysis. To achieve high revenue and greater customer satisfaction, companies are now using high tech tools by implementing supply chain management processes and enterprise level software to gather, mange, and utilize information in the most efficient way.
For an optimal supply chain network, the organization needs to remember a few key things about supply chain IT:
Organizations need to synchronize the supply chain including production, logistics, material, and other resources across the entire supply chain network. To reduce waste in the manufacturing process, it is necessary to have the appropriate tools and technology in place. Reducing inventory and lead times across the supply chain can drastically improve the performance of the organization. As companies around the globe look towards internal processes for reductions in cost, they are adopting more synchronized manufacturing to gain a competitive edge.
suppply chain would be an strategy
The Missing Links in The Supply Chain.
Marketing and Credit are key activities of any business.
Marketing is about getting and staying in front of potential and existing customers in a positive way.
Credit is about finding ways to expand the movement of products and services at a profit and then keeping customers current and placing the normally most profitable orders…repeats.
Credit, due to it’s interface with customers, sales, finance, the warehouse, suppliers, operations and many other functions within a business, is in an ideal position to provide feedforward on “areas of opportunity for improvement”…throughout the entire supply chain from generating customer need/demand to fulfilling customer need/demand.
Credit, again due to it’s interface with in the supply chain, is a critical part of marketing.
Mitakuye Oyasin,(we are all related)
thank you very much
it is easier said than done when it comes to reducing inventory & lowering cost.
How about bulk discounts and limited or monopolised supplier base ? The intricate & complex political & business environment can overshadow what SCM system recommends.
Also, not forgetting that lump-sum purchases can be advantageous at securing supply in mid to long term period for business survival against a rival as well as reducing overall unit cost assuming demand remains constant.
Managing a supply chain in today’s world is a complex process. There are multiple dynamic data points that are in constant flux that impact the performance of inventory. On top of this challenge is the current economic crisis where nearly every firm in America is trying to reduce their exposure to excess inventory and squeeze as much cash out of inventory. A competing demand is the requirement to service customers. An effective way to balance these two competing demands is through inventory optimization. Check out http://www.tclogic.com. Full disclosure, I am employed by TCLogic.
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