Supply Chain Optimization

"eCommerce success is not just due to technology or digital apps, but due to robust and valuable contribution by Supply Chain, Procurement, Logistics management ."

Integrating technology into supply chain management processes cannot happen overnight; hence there must be a reasonable transition period to ensure business continuity since many of them require implementation, training, infrastructure, alignment, and stabilization period to become fully operational.?

"Supply chain optimization" means operating a supply chain at full proficiency, which is often supported by key performance indicators like process improvements, demand and supply management leading to working capital optimization, cost-saving initiatives. Every organization's goal is to deliver products and services at a very competitive price, which is possible only when the purchase price of such offerings was competitive in first place. Given achieving these goals, procurement must balance the following expenses like production, inventory, transportation, product or services acquisition, fulfillment, and customer service expectations noting the fluctuations in material costs, carrier changes, customer demographics, or other factors requiring continuous oversight. Given the complexity involved, supply chain optimization may be a commercial activity that should be considered a marathon with a long-term growth trend and not a sprint.

Companies also consider supply chain optimization when there is an important event, like a merger or acquisition, or when concerns are surrounding financial results or strategic initiatives by Procurement and supply management team. In the current scenario, transportation costs increase due to their rising costs, suppliers maintaining their service levels, and/or other members of your supply chain are complaining. Response to e-commerce demand has led companies to bolt-on direct-sales capabilities without integrating them into Omni-channels, eventually resulting in higher costs, fragmented management. ?

Supply chain optimization typically starts with a radical analysis supported by demand forecasting, followed by production and inventory management. The study includes inbound raw materials or components, manufacturing, transportation, and distribution. A strategic review of your supply chain network will end in a series of plans for the organization with a horizon from immediate to about five years ahead. For sure, there should be contingency plans in place to respond to emergencies, like material and labor shortages. These plans will help your company move from a more reactive to a proactive supply chain approach.

Reference - Art of Buying (Book available on Amazon - https://a.co/d/9FJRGnT)