Supply Chain Optimisation Through Technology

Supply chain optimisation makes the best use of technology, resources, and information to improve efficiency and performance in a supply network.

Why should we talk about supply chain optimisation through technology right now? Well, first, the pandemic and now the invasion of Ukraine has pulled supply chains back like a slingshot, and the pressure intensifies by day.

Transport costs have gone up as fuel prices soar, and some transportation carriers impose "war risk surcharges". As a result, transhipment hubs are packed, cargo is delayed, and air cargo capacity remains limited.

Therefore, supply chain planning becomes crucial for navigating the current crisis. And we can't help but wonder if supply chain optimisation through technology alone is a viable solution?

What is Supply Chain Optimisation?

Supply chain optimisation implies reaching the maximum efficiency in your supply chain network. This means meeting customer needs at the lowest cost possible and with the highest level of profit.

Therefore, supply chain optimisation is a delicate balancing act of managing costs, inventory, transportation, customer service, and third-party expectations.

This process is not a sprint. It's more of a never-ending marathon. If you had reached a perfect supply planning configuration before the pandemic or the Ukraine invasion, it does not mean it works these days.

Material costs fluctuate, carriers change, customer demographics or the whole world structure can dramatically shift, thus influencing your supply chain. Supply chain optimisation is not an ad-hoc process. It needs continuous oversight.

The Global Supply Dependencies and The Domino Effect

Right now, the global trade dependencies show an impending domino effect. Approximately 241,000 businesses rely on Ukrainian suppliers, and 374,000 companies rely on Russian suppliers, as shown in a?Dun & Bradstreet study.

The most affected sectors are the energy, food and rare metals industries. It all adds to the enormous humanitarian crisis, and it makes you ask yourself -?when will this all end...

But back to the supply chain optimisation strategy...

What is the most crucial type of data on a procurement and supply chain manager's screen right now?

• Manufacturing costs
• Transportation costs
• Distribution costs
• Inventory management
• Demand forecasting
• Customer expectations

How Do You Plan a Supply Chain Optimisation Strategy?

First, there's the strategic planning phase. This is where the realigning of the inventory, production, transportation and distribution goals needs to happen. At this level, managers need to re-think the allocation of resources throughout the supply chain.

This is where your level of corporate agility makes its presence felt. Sometimes the data shows that significant changes to your organisation and supply chain design are due, but they don't happen for lack of agility.

The tactical planning?includes the timing for each step that needs to be taken. It should also feature the skills and capital requirements, such as new warehouse spaces or new talent.

The operational planning?comes third and details the day-to-day changes and activities that need to be done. This is where resources are allocated, and performance measurement KPIs are decided. It could include monthly, weekly and even daily activity planning.

The contingency plan?is the worst-case scenario life vest for your business. It should be part of any supply chain optimisation strategy. You need a contingency plan, especially in times like this. We know it's quite tempting to ask "What could be worse than this?". Well, your contingency plan should tell you that, and also present solutions to mitigate all the upcoming issues.

So, what exactly do you optimise?

You need to create a responsive supply chain that can deftly adapt to the global costs and logistics fluctuations without incurring high costs.

These are the six most important areas that we think you need to optimise right now.

1. Inventory management

You have to avoid out-of-stock or overflowing inventory scenarios in any crisis. Inventory management is a delicate balancing act. There is always place for more optimisation here.

Run scenario after scenario and make contingency plans. Top-notch inventory management will ensure you can meet customer demand without enormous costs.

2. Order fulfillment

You have to ensure that you can deliver your products fast and keep your customers happy. Troubling times usually bring transportation disruptions. So, you need to build contingencies and ensure you can fulfil your orders at all costs.

3. Communication with customers and partners

You need to keep the communication channels open with all your customers, suppliers, and partners, no matter the disruption.

4. Prime decision-making

You need visibility and a reliable data system for an optimal decision-making process. However, hard data is not enough. You need processing algorithms, and more than that, you need a?reliable method for gathering data.

Unfortunately, you cannot build all of them overnight. Start optimising your costs visibility first, as this is where most savings opportunities lie.

5. Managing operating costs

There are always ways of saving money. So, benchmark your costs to the industry norms, and see in what areas of your business you can save considerably by optimising.

6. Suppliers' Relationships

Strong relationships with key suppliers will help you reduce inventory, accelerate order fulfilment and ensure a better logistics strategy.

It's all about human relations. You can't talk about supply chain optimisation without this component. Our team at BDD specialises in?finding new suppliers and maintaining?a close relationship with them.

Supply chain optimisation through technology

So, what role does technology play in supply chain execution and planning? Supply chains are complex machines that function based on data. Sometimes, the data seems random and ad-hoc. However, it is not.

Machine learning and advanced analytics can deliver brilliant insights and forecasts regarding demand or costs. So, it is possible to have a machine tell you what to do and what decisions to take in turbulent times.

The reason why supply chain optimisation AI seems so inefficient to some people is because of poor data inputs. A machine is as good as the data you feed to it. However, once you manage to put in place a global data-gathering system able to collect data from all the nodes in your supply chain, AI will become so much better for your business.

For example, you can use an advanced analytics tool to determine exactly if one a shipment of refrigerated goods is at risk of failure. By tracking location, environmental status, traffic, weather conditions, and more, you can have a system tell you if your shipment will arrive intact or not to its destination.

Armed with such knowledge and forecasting power, your organisation will become more agile, able to reroute deliveries and proactively dispatch repair crews on site.

Algorithms and other types of predictive methods can really process and analyse large data sets to come up with insights at a granular level.

Integrated Management Software

Managing a supply chain with multiple touchpoints and different business processes is not an easy task. Businesses often have different systems for sales, finance, inventory, and other areas of their business.

These systems do not always communicate effectively with each other, which can disrupt and delay processes due to a lack of data.

An effective way around this is to use software that integrates all the different systems into a centralized database.

This allows all different departments to access the relevant data they need, and the software can streamline their processes.

In conclusion, supply chain optimisation is a complex process aimed at finding the flaws in your business process and removing them one by one. The success of your supply chains is the success of your business.