Best Practices to Modernize Your Supply Chain
Five Ways to Spend Less While Accomplishing More
?The worldwide push towards nationalization has put increasing pressure on balancing operational efficiency with greater supply chain resilience. It's a delicate balancing act. According to a recent?Gartner survey,?less than one-third of the respondents said their supply chain network had good visibility and the agility needed to shift sourcing at a moment's notice. As we move into 2022, supply chain resiliency is becoming an increasing priority for many companies, to the point that the cost of retaining multiple supply resources is simply the cost of doing business.
?A digitized supply chain can offer businesses real-time visibility into the transit of goods across supply networks. Companies can track the full-product journey from conception, inspection, transportation to delivery.?
?Supply chain leaders must balance resilience and efficiency to secure their network or resources. Modernizing supply chains comes with additional costs, but doing nothing can be much more expensive in more ways than one.?
?David Simchi-Levi, Professor of Engineering Systems at MIT, has done tremendous research to design and manage supply chains. He?recommends?implementing profound transformation with Smart Supply Chain Digitization that begins with a five-step program that automates and generates supply, financial, and trade plans for the next couple of years.?
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Demand Planning
Managing supply chains based on demand is not a novel idea. What is new is the availability of tremendous amounts of customer data. Better than traditional methods of demand forecasting, which are based on historical information, data-driven analysis is more current. Assembling readily available data presents a more accurate picture of customer and supplier behavior. An excellent way to obtain greater intimacy with supplier's performance and changing customer behavior is by forming a digital thread. Create a communication framework for sharing information upstream and downstream. More than connecting data and systems, this digital thread involves the integration of workflows and people. The Combination of data from all supply chain entities is more valuable than data from a single network.
?Combine all future promotions, discounts, and marketing investments with consumer, macroeconomic, and external data to develop a market demand forecast by SKU and retailer.
?Retailer Order Planning
Predictions for retail orders combined with historical data on the shipments to the retailer create a weekly forecast of future orders. Today's customers won't tolerate delays or incorrect orders. To deliver on this expectation means having a highly efficient workflow between warehouse to fulfillment to shipping must be in place.
Assemble all predictions for sales orders and use them to design and implement a feasible supply plan that involves diversification. Again, there's an added cost, but the strategy considers all resources, including raw materials and finished goods inventories. This strategy is a departure from a one-size-fits-all supply chain to a segmented approach.?
?Current technologies enable real-time insights into asset location and status. Cloud-based GPS and cost-effective Bluetooth Low Energy (BLE) asset tracking provide up-to-date information on the location of materials and estimated times of arrival.?
?Financial Planning
Supply Chain finance works best when the buyer has a better credit rating than the seller because they can obtain working capital for less money. Short-term credit optimizes working capital for both buyers and sellers. Evaluate entire end-to-end processes that involve the procure-pay cycle, working capital management, and the order-to-cash cycle. Use a weekly SKU supply plan for all retailers to create revenue and gross margin forecasts for each brand or product category.
?Alignment Planning
Any financial forecasts have to be compared with overall business objectives to ensure they're in alignment. Any discrepancies between them will probably require a change in strategies, such as an increase in the marketing budget or the implementation of deeper discounts.
?In Conclusion
Having a comprehensive automated approach allows companies to redefine supply chain strategies. Supply chain digitization optimizes adaptability. Organizations can respond more rapidly to surprises such as unexpected shifts in the market landscape. And, as it is with all modern infrastructures, leadership will be in a better position to identify and seize business opportunities as they develop. Once you implement these initiatives correctly, they will benefit the organization in three ways:
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