Saturday, September 3, 2016

Important Information On Supply Chain Optimization

By Rebecca Jones

The supply chain is what ensures that products, financial resources and information move from the supplier to the consumer. Depending on the nature of the business, a number of intermediaries (manufacturers, wholesalers and retailers) may be involved. There is a need to properly manage the system so as to realize maximum returns. Supply chain optimization is an aspect that every business should strive to implement in its operations.

There are various factors that determine how complex a supply chain will turn out. They include the specific type of business, the process that is involved to move the product from the supplier to the target consumer, the size of the market and its geographical location and the type of technology that is used to make all these possible. The tremendous growth in technology has made it easier for all the players to collaborate easily.

Optimization uses various tools and processes to ensure that the operations of the system are as efficient as possible. Such will include, for example, minimization of operation costs such as those related to manufacturing, transportation and distribution. The objective is to deliver products to the end consumers at the lowest possible cost and to generate the highest profit. A number of mathematical modelling techniques that are run by computer software are usually used to achieve this.

The utilization of mobile-based technology can improve various aspects of the chain. Such will include field sales, marketing as well as provision of direct services to consumers. Through the mobile-based technology specific product information such as item origin, contents and manufacturing methodology can be obtained by prospective consumers. Since some consumers are quite sensitive about sustainability, information on the same can be easily communicated through the same platform.

One of the principles of optimization is to try and predetermine demand accurately. This is done by taking into account historical demand and predicting future events. It is possible to use this approach for aggregated data such as a specific group of customers or a type of merchandise. Safety stock levels have to be managed both for products that have steady demand as well as for those whose demand is erratic.

Before embarking on the exercise, you need to analyze your strengths as a company. Results are likely to reveal areas that you perform better than others. For the areas in which you may not be doing so well, consider outsourcing. There are many firms that are specialized in one or two tasks on the supply system hence are likely to have greater efficiency than a company that has to handle everything.

Appreciate that the process of optimizing can be long, tiresome and frustrating. Always ensure that you have a global mindset when making decisions. This means that you consider the chain in its entirety and not just one aspect when making decisions. Every time a change is made evaluation should be done to assess impact that it has created. This can then inform your next move.

When a supply chain is optimized, there are a number of advantages that the business will have. Among them is the fact that the operation costs will be minimized and this will increase the profit margin of the organization. Another major advantage is better collaboration among all the players translating into faster inventory clearance.

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