Supply chain management (SCM) is the process by which companies create value for their customers. It begins with a supplier of raw materials and finishes with a customer who receives a product. In order to ensure the supply chain functions properly, supply chain optimization focuses on stocking levels, transportation of goods from suppliers to retailers, and how retailers manage which products to stock.
Supply chains require constant management and tweaking in order to get the most optimal results (i.e., greater revenue and profits). A supply chain starts with manufacturers, distributors and retailers and can include raw material suppliers, factory workers, transporters of goods (trucks or railroads), wholesalers, and retailers. All of these workers contribute to a supply chain that will be used by customers.
There’s a lot going on in supply chains, and many things can go wrong, from just-in-time delivery to replenishment orders falling too early or too late in the process. In order to run an efficient supply chain, there are a number of best practices that should be implemented.
Supply Chain Optimization Best Practices
The following is a list of the top ten supply chain management tips:
1. Partner With a Logistics Provider
Finding a good supply chain partner to assist in the planning and execution stages of supply chain optimization will help you create an efficient supply chain. A logistics provider can help you with warehouse management, transportation management, and material handling.
2. Implement a JIT System
A just in time (JIT) system is crucial to an efficient supply chain. It can be difficult to manage large warehouses when you’re waiting for goods; instead of keeping the goods until they are needed, it’s beneficial to have a JIT system that allows you to receive goods when you need them.
3. Use RFID Tags
Radio-frequency identification (RFID) tags can be attached to pallets and cases so your company can track product location and shipping in real time. If either the tag or the product is damaged, you can identify it quickly.
4. Utilize Customer Data
Your customers’ buying habits will determine inventory management and warehouse stocking. Although it may be difficult to get your customers to provide you with data, there are programs that allow you to connect their profiles to the items they have bought in the past. This is very helpful for forecasting future demand.
5. Strive for Transparency
If you don’t know how much your company is spending on goods, it’ll be difficult to improve the supply chain. You may not realize that something isn’t working well until you see the figures; then, you can make changes to fix problems and create an efficient supply chain.
6. Conduct a Full-Scale Analysis
In order to optimize your supply chain management, you have to consider whether the products are arriving on time; if they aren’t, you need to figure out where the problem is. Is there too much product? Not enough? You can only make changes to improve the supply chain if you know what’s wrong with it in the first place.
7. Keep Transportation Costs Low
Transportation costs can make or break your supply chain’s success, especially when you’re sourcing domestically and internationally. These costs include everything from shipping to freight forwarding; once they’re set up, you’ll need transportation software that makes the cost optimization process easy.
8. Set Up an Efficient Warehouse
Warehousing may not be the most glamorous part of supply chain management, but it’s vital. A warehouse is where shipments are received and stored until they’re ready for distribution or use by your customers. You’ll need to set up tracking software so you know what’s in your warehouse at all times.
9. Track Everything
It’s impossible to optimize a supply chain if you aren’t tracking items as they move from one part of the system to another. You’ll need to make sure that everyone involved in transporting goods is using the same software, and that this software is up-to-date.
10. Give Your Employees a Say
It might be beneficial to give employees a voice in the decision-making process. Making them feel like they’re part of an important aspect of your business can help improve morale and create a more efficient supply chain at the same time.
A well-run supply chain can help you succeed in business. By following the ten tips outlined above, you’ll be able to create an efficient supply chain that works for your business’ needs.
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