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5 Tried and True Supply Chain Optimization Methods That Still Work

Michael Wilson | Nov 2, 2017

Technology and innovations play an undeniable role when it comes to supply chain efficiency, but that doesn't mean there's no room for the "old ways" in your current workflow. In ...

supply-chain-optimization-methods.pngTechnology and innovations play an undeniable role when it comes to supply chain efficiency, but that doesn't mean there's no room for the "old ways" in your current workflow. In fact, there are a number of practices that have aged very well in the face of new technology - enough so that they're still indispensable amid warehouses full of IoT-enabled devices. Here are the five most enduring best practices for your supply chain optimization efforts.

1. Staying in Touch

Needs, abilities, and opportunities change frequently in business, and if you aren't proactively watching for those changes, they can cause a lot of damage to your growth potential in the chain. Keep in contact with your supply chain partners whenever possible - ask them if they're planning to add new products or services to their lines, and communicate any reductions or increases in ordering frequency to avoid broadsiding their capability balance. This communication effort will also help you keep an ear to the ground when it comes to supply chain news and innovations from your partners' respective niches.

2. Combining Your Orders

It's too easy to operate with blinders on when it comes to per-item cost. The number you need to look at is the actual, holistic cost of serving that item or component into the supply chain. While your distributor for component A might have component B at a slightly higher price point than a rival distributor, the cost savings - transportation, ease of ordering, and so on - can often be unearthed in operations, rather than the upfront item cost itself. Ask your current supply chain partners for their full catalogs, and gage their interest in expanding their offerings in exchange for a certain volume of guaranteed sales from your company.

3. Keeping an Eye on Metrics

If you're still using the same metrics you were 2 or more years ago to identify supply chain optimization opportunities, you're likely missing something important. Metrics, much like your staff and your facility, are an asset that needs to be examined and adjusted at regular intervals. You could be tracking a metric that no longer matters in your industry, or failing to track one that's crucial to remaining competitive. Either way, without attention, there will be troubling gaps – like expensive overages or costly shortages - in your planning views. Your metrics should always have baselines, or "floors" to emphasize the expected standard, as well as percentage growth goals broken down in time intervals to measure progress.

4. Yearly Transportation Assessments

Even if your shipping needs remain more or less the same from year to year, assessments are a must. Consider the recent shift to DIM (dimensional weight) pricing in shipments from major carriers like FedEx and UPS. If you'd been shipping large, lightweight boxes assuming rates had simply increased, you might have been only a few easily shaved cubic inches away from avoiding that added yearly cost. Even details as simple as the materials you're using to pack, ship, and label may be able to be adjusted to be more cost-effective or traceable, helping introduce more transparency into your supply chain.

5. A Back-Up Plan

No forward-thinking company likes to consider worst-case scenarios, but with the havoc that 2017's hurricane season and western wildfires have introduced into cross-country supply chains, it's a necessary precaution. While it may take some time and expense to create and "bench" a back-up plan, it would cost far more to have to create and implement it out of necessity in the middle of a disaster. Remember, even as you're scrambling for another supplier or carrier, all of your competitors are likely to be doing the same, driving up both costs and scarcity. Alternately, if you're well prepared for an emergency event, your shipping will be largely uninterrupted, your end buyers will recognize that, and your brand perception will enjoy a lingering boost.

Supply Chain Optimization Doesn’t Have to Be High Tech or Expensive

Is your company in tune with these five best practices, or are you guilty of being lured away from them by the ease of technology? Remember, computers can never truly replace an agile, personable business mind, so it's important to work with new supply chain technology, rather than letting it solely work for you. You'll never regret staying in touch with the heart of your business, whether it's the connections that keep it running, the staff that keeps your warehouse moving, or the 3PLs that keep your packages heading to their destination.

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