For many businesses, both large and small, the supply chain is an integral part of their operation. How components and goods are received, stored and shipped has a dramatic impact of the performance of the business. Operations, revenue and customer satisfaction are all reliant on this, but what of the cost? Here we look at how to reduce supply chain costs effectively.
The Importance of a High Performing Supply Chain
Research carried out by Deloitte suggests that up to 80% of companies with a high performing supply chain achieve an above average growth in profit. The importance then is clear, but how do businesses achieve this in a cost effective manner? Well, it all starts with a plan.
Supply Chain Strategy and Planning
Contingency planning and logistics are among the elements that need to be considered when developing a strategy for a supply chain. The goal, a controlled stream of goods entering and leaving the business is only possible if reliable suppliers and logistics providers, such as TNT, are engaged.
Good strategy and planning is an ongoing concern that is achieved over time and that involves building relationships with third parties. Regular reviews are paramount and this involves reviewing costs as well as performance – a great supply chain can only remain so if both performance and value are achieved.
High performing supply chains now rely heavily on technology. Using radio frequency identification (RFID) tags, for example, allows companies to monitor and track items as they move through the supply chain. The system is faster than the traditional method of recording everything by hand, using a paper based system and therefore reduces costs. In addition, potential for human error is greatly reduced and this also has an impact on efficiency and costs.
There are several ways to monitor the performance of a supply chain, but perhaps one of the most effective is to ask the opinions of the customer. Gathering both quantitative and qualitative data from customers regarding aspects such as the point of sale experience, delivery times and out of stock issues offers an exacting performance indicator that will be reflected in revenue.
In the modern business world, the use of technology and big data go hand in hand with the more traditional aspects of building a high performing supply chain that is cost effective. Using the technology will, ultimately, bring down costs, but will also highlight areas where additional value can be achieved.