Keeping a clear focus helps avoid problems. In the supply chain, it’s crucial to know which areas deserve your attention. But what should you focus on, and how can this help your business?
Discover how staying focused can lead to better outcomes for your supply chain and overall success in your business operations.
Watch the full video below and explore the important areas you need to focus on and
Looking to boost your supply chain performance? Focus on these top four areas.
I recently discussed popular fixes for 2023. Now, let’s shift gears to the top three things that can make a real difference in improving your supply chain. With over 30 years of experience, these areas have consistently provided significant benefits to organizations.
Cost to Serve Analysis
The first area to focus on is cost to serve. Analyzing cost to serve helps identify and fix profit and cash leaks in your supply chain. This process is especially crucial now due to rising cost pressures affecting many businesses. If you haven’t conducted a cost to serve analysis yet, I recommend checking out our 14-minute video tutorial, which provides a comprehensive guide to the process. By examining cost to serve, you can uncover areas where a significant portion of your orders might be losing money. This revelation underscores the importance of cost to serve analysis in optimizing profitability and making informed decisions. Many organizations are surprised to find that a substantial percentage of their orders are not generating the expected profit, making this analysis a valuable tool for improvement.
Distribution Network Assessment
Next, review your distribution network. Distribution networks often become outdated over time and may not align with your organization’s evolving needs. Examine how products flow through your network and the frequency with which they are handled. Recent site visits have revealed that many organizations struggle with inefficient product flow, leading to increased costs and delays. Additionally, assess your stockholding locations to ensure they remain suitable for your current requirements. An outdated network may not support your current operational demands effectively. Adapting your distribution network to align with current business needs can lead to significant improvements in cost efficiency and service levels. Regular evaluation and adjustment of your network can ensure it supports your operational goals effectively.
Effective Inventory Management
Lastly, focus on inventory management. The recent pandemic led many organizations to increase their inventory levels significantly, resulting in imbalances such as overstocking some items while running short on others. Effective inventory management is crucial for balancing stock across different categories and service levels. Achieving this balance is essential for maintaining operational efficiency and preventing disruptions. Proper inventory management helps meet customer demand while minimizing costs associated with excess inventory or shortages. Regularly reviewing and optimizing inventory management practices is essential for adapting to changes in demand and ensuring that stock levels remain appropriate.
Balancing Stock Levels
A balanced approach to inventory management involves not just maintaining overall inventory levels but also ensuring that stock is appropriately distributed across various product categories and service levels. This balance helps prevent issues like stockouts or excess inventory, which can disrupt your supply chain and affect customer satisfaction. By focusing on effective inventory management strategies, you can enhance your supply chain’s resilience and responsiveness to market changes.
In summary, to boost your supply chain performance, focus on cost to serve analysis, distribution network assessment, effective inventory management, and balancing stock levels. Each of these areas plays a crucial role in improving overall efficiency and effectiveness in your supply chain operations.
Related articles on this topic have appeared throughout our website, check them out:
- Top 6 Supply Chain KPIs: Keep Your Dashboards Simple
- 3 Common Inventory Management ‘Sins’—And How to Avoid Them
- Cost to Serve at a Glance: 9 Steps to Success & 5 Mistakes to Avoid
- 10 Reasons to Review Your Distribution Network Design
Editor’s Note: The content of this post was originally published on Logistics Bureau’s website dated July 5, 2023, under the title “Top 3 Things Organization Should Focus On“.
