A Supply Chain Management System To Optimize Supply Chain

Global retailers have large complex supply chains, to efficiently manage these they have to adopt a variety of tools and software to ensure an effective supply management system. In this blog post, we take a look at a few of the tools global brands use to manage this supply chain complexity.

1. Technology

Using technology as part of your supply chain management is becoming essential to remaining globally competitive. It can be used to for real-time tracking of your orders, to real-time inventory updates. The analytics that you receive enable visibility, early forecasting of potential risks and early identification of systems that may not be working. Technology is used to simplify your supply chain, thus reducing operational expenses and overall timing.

• Dako, a UK Furniture retailer uses Transportation Management Software (TMS), such as STREAM which is a particular technology that can be used to track shipments, map routes and also keeps track of inventory in real-time, minimizing supply chain challenges.

2. Strategic partnerships

By creating an emphasis on supplier relationships, it becomespossible to establish collaboration with the moving parts of the supply chain. This is done through clear communication of goals and expectations, through stakeholder buy-in which creates a vested interested in the outcome of the quality of the product. This, in turn, fosters a relationship which results in system innovation and supply chain transparency.

• Supplier Relationship Management (SRM) is driven by consistent, clear interactions between the supplier and buyer, SRM programs build newcapabilities that enable strategic sourcing and procurement. Effectively applying SRM as a part of your strategy can help achieve greater quality in your product and a faster time to market.

3. Inventory management tactics

Managing inventory is all about balance. Making sure that you don’t have too much inventory thus face the risk of increased storage costs and a longer time to market having an effect on your return. You also need to make sure you don’t have too little inventory forcing people to shop elsewhere for a similar product. Both sides of the equation can have detrimental effects for your brand. Here we look at two inventory management tactics that are applied by two of the biggest global retailers:

Check out our comprehensive guide on optimizing your quality assurance systems.

• Cost per touch:  This strategy is employed by IKEA, and is centered around the idea that each time a product is touched within the supply chain process, it is charged accordingly. This tactic empowers the customer and also brings them into inventory management. This system has encouraged customers to go as far as collecting their product from the nearest IKEA warehouse as well as building their item at home, therefore reducing the number of times the product was touched and reducing the end costs.

• Cross-docking: Is “the direct transfer of products from inbound or outbound truck trailers without extra storage”. This strategy is adopted by Walmart which has reduced their costs and transportation times. Walmart has a system that is smart, visible, fast and efficient. This has created a faster time to market and a happier customer.

4. Quality Control

Often times the quality department or team is over-looked when trying to optimize the supply chain for procedural efficiency. As a good quality control manager can help to minimise human errors within the production processes. The aspect of quality affects nearly every step in the supply chain process from raw material inspection to the final product. You may want to take into consideration the value of these departments working together as they can provide overall supply chain process efficiency, saving you time and procedural expenses.

5. Focus On Core Competencies

Your brand may not have the expertise to effectively manage quality systems. Therefore it may be of benefit to outsource the management of your quality procedures to a trusted quality provider. There are many benefits to this approach from the time it takes to testing a product as they have the right technical skills which has a faster turnaround time to also having great cost benefits.

The above tactics help reduce the amount of moving parts that encompass the supply chain, with fewer moving parts, one can reduce potential risks and costs over time. This creates an efficiency and a level of quality in the supply chain that was never there before.

A supply chain management system consists of complex procedures; the above tools seek to simplify these through greater visibility and transparency creating a level of quality and efficiency that is globally competitive. Which of these tools have you adopted? What is the greatest efficiency that you have experienced through adopting any of these tactics?

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