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Supply Chain

6 Strategies to improve Supply Chain Management

Julien Broucke
February 15, 2022
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min read
Supply chain improvement : 6 successful strategies to solve supply chain management challenges

Supply chain management is crucial for cost & cash optimization (e.g. stock turn, inventory optimization), service level (e.g. order arrival on time in full) and overall delighting customers

Simply put, an efficient supply chain system makes businesses increase productivity, as well as increasing customer satisfaction.

Today, to stay at the top of your game, your supply chain management practices need to evolve continuously. Globalizations, enhancement of international trade, and evolving customers' expectations have led supply chain systems to evolve significantly.

Therefore, organizations must constantly reinvent their supply chain operating models, systems and management to ensure that they remain successful.

Moreover, Supply Chain improvement or mastery can not only deliver productivity and make customers happy, it can be an enable a company to grow rapidly.

Wondering how you could improve your supply chain management?

Supply chain improvement : 6 successful strategies to solve supply chain management challenges…

1. Create a Supply Chain Committee

The first step to improving Supply chain management is to set up a supply chain committee.

The committee's main role will be developing strategies to give direction and align the supply chain system of the organization.

The council aids in the removal of organizational impediments. It also enhances cross-functional communication within the company, avoiding silo mentality.

It does help finding the right balance between scale and agility, typically by appointing a CSCO (Chief Supply Chain Officer).

2. Build a Healthy Supplier Relationship

The relationship between your suppliers and your company can be a significant competitive advantage.

Creating and maintaining a stronger supplier relationship should be an ongoing process.

Therefore, to improve your supply chain strategy, focus on developing strategies to maintain healthier supplier relationships.

This collaboration will mature from pure cost saving opportunities to generating additional revenue.

3. Improve Distribution Network

Typically, 80% of the cost, service and working capital structure are locked in the network design.

Reviewing the overall distribution network should be done at the strategic and tactical level every year, as a supply chain best practice.

At a strategic level, regular reviews should be made as to where the factories, distribution centers, etc. are located and their sizing.

At a tactical level, the business should review regularly what products are produced in which production sites and how are products planned to flow from raw material to the end customers, as well as the typical work days and shift patterns.

Then, the day to day optimization takes place within a well optimized network at the holistic level.

4. Embrace and Integrate Technology in the Supply Chain Processes where it really matters

The world is evolving each day. Innovation and technology enhancement is becoming a powerful tool in business today.

Supply chain management technologies can improve business processes for effective growth of the company. Therefore technology adoption drives the gaps between leading v laggard Supply Chain organizations.

First, review the existing processes and determine areas where implementing supply chain technologies could improve the overall process.

The second step is to choose effective software to implement and manage the people side of the transition.

Some of the technology most effective in improving the supply chain processes includes industrial scales and automation technologies.

For example, data science can help identify product formula optimizations impacting the bottom line, or better dynamic pricing strategies per go to market channel, leveraging data available almost freely nowadays.

5. Create a drumbeat to review procedures and work processes

Supply chain managers must review policies and procedures to ensure they are fit for purpose, efficient and foster compliancy.

The regular review helps identify different risks and opportunities which can be

translated into direct or indirect bottom line impact.

Make sure you have the right people, doing the right things at the right time. Every time.

Also it helps in retaining and developing supply chain talents as you can spot who is not contributing to the full extent or in the right position.

6. Optimize Inventory and set Targets

As expected this one is still on the list.

Managing a supply chain in an effective way will optimize and cut inventory expenses.

Too often these exercises are one offs and improvements are not sustained.

Interestingly, we often have companies focusing on the inventory reduction without comparing the cost of that lower working capital v the additional staff required to manage more mature or advanced business processes and systems.

Having higher inventories can be more advantageous holistically. Yet, it appears more expensive for the people holding the inventory on their local P&L.

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Julien Broucke
Co-founder & CEO, Process Metronome

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