7 Practical Ways To Optimize Supply Chain Performance

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Supply chain is the engine of e-commerce. It doesn’t matter if you’re a manufacturer, distributor, or retailer, you’d need to deliver goods through a network of suppliers. Aside from suppliers, you’d need optimized tools and processes for efficient distribution and performance.

Supply chain optimization depends on three factors: low-cost operation, high-profit margin, and customer satisfaction. Each element is a determinant of customer relationship management (CRM) and an enabler of supply chain CRM sales. However, management problems lie in keeping operational costs low, generating high-profit margins, and ensuring customer satisfaction.

 

Challenges To Supply Chain Performance

Before you can optimize supply chain performance, it’d be best if you identify the challenges beforehand. Problem identification is the first step to creating an efficient optimization system. Some common issues associated with global supply chain performance include:

  • Rising Costs

 

One of the benefits of supply chain optimization is reducing operating costs and increasing profit margin. However, this same benefit is under attack, the cost of global supply chain operation is climbing high to the disadvantage of many businesses.

The soaring fuel price affects the cost of transporting goods by road, air, or sea. An increase in labor cost affects the price of commodities, and in turn, this affects the cost of raw materials. While these factors are globe-specific, there are also individual factors. 

 

  • Consumer Demands

 

Consumers have more choices, which may be the weakness of companies that can’t meet their demands. Modern consumers are not only concerned about prices but also product quality, efficient delivery, and support availability. 

For example, consumers are becoming more aware of eco-friendly products and would pay anything to get goods delivered on time. Unless manufacturers leverage tools and optimize the supply chain processes, it’d be difficult to remain within the demands of modern consumers. 

 

  • Inventory Management

 

With the rapid birth of new companies and products, consumer choice is becoming more challenging to measure. This difficulty affects inventory management, as marketers and manufacturers can only estimate the exact quantity of stock to purchase or produce to keep up with demands.

Sometimes, inventory is low, leading to a loss of sales opportunities, while in other times, it’s high, leading to waste. This fluctuation in consumer behaviors has been incredibly hard to assess for inventory management. Unless supply chain tools and processes are optimized, the trend will probably continue.

 

Practical Ways To Optimize Supply Chain Performance

An adequate supply chain performance considers several supply chain strategies, including the effective use of facilities, proper inventory management, and logistics costs. If you’re looking for the best way to optimize your supply chain performance, the following tips and practices should help:

 

  • Work With Consumer Demands

 

If you invest in supply chain operations that doesn’t directly answer the needs of the consumers, they may be discouraged to buy, which leads to waste. For instance, if consumers demand swift delivery of products and affordability, it’d be best if the supply chain operations are tailored to meet their demands. Working with consumer preferences is one of the ways to improve the optimization of supply chain performance.

 

  • Work With Analytics Tool

 

Thanks to technology, marketers and manufacturers can make decisions based on the analytics of their customers. That way, it’s possible to make personalized decisions that optimize supply chain processes for improved performance. However, analytics would require you to run experiments to get the best result regularly, you’ll need to stay consistent and committed to the process to optimize your supply chain performance.

 

  • Negotiate Raw Materials 

 

Good negotiation helps you build better relationships and eliminates future problems and conflicts. It also helps with efficient cost management and improves cost and profit optimization. Therefore, if you’re getting raw materials for your supply chain, you should do the negotiation right. If you can get the best raw materials for the lowest price possible, you can serve customers with quality products and improve your supply chain performance.

 

  • Consider Your Employees

 

Your employees are the lifeblood of your company. They handle most of the operations that concerns your company, so you need to treat them right. Otherwise, it’d be impossible to achieve the proper supply chain optimization, your workers shouldn’t be behind workflow management and project delivery. Understanding their crucial roles in logistics management and integrating these functions into delivery operations can lead to improved supply chain performance optimization.  

 

  • Develop Quality Control Standards 

 

If you don’t know the exact quality of raw materials or products, you should base them on consumer needs. This is because the standard quality control, in most cases, is driven by customer demand. Using accurate consumer data, finding out consumer needs, and setting a standard for quality control can improve your supply chain performance. Always keep in mind that product value and standard should not be compromised for effective optimization.

 

  • Use Tracking Tools

 

It can be discouraging to commit to your customers a delivery date, but always fail to fulfill. You become stuck and don’t know what to say to them anymore. But that doesn’t happen when you use tracking tools. With these, you can tell when an order has been processed, picked, packed, and shipped. You can even send a tracking number to your customers, so they don’t have to get disappointed and call you up each time.

 

  • Stay In Touch With Your Suppliers

 

You should stay in touch with your customers as well as your suppliers, build rapport and maintain a good relationship because they are the lifeblood of your business. Business contingency is important when problem arises unexpectedly, these obstacles usually come from your suppliers. That is the main reason why you should always keep in touch and make it easy for them to let you know immediately if something happens. This will help you avoid unscheduled changes and improve your supply chain performance.

Conclusion

Supply chain performance optimization is crucial in helping you achieve your business goals such as consistent profits, and maintaining good relationship with your customers and suppliers. It keeps you in business by ensuring cost minimization, profit maximization, and improved customer satisfaction. 

 

Simon Paterson: Simon Paterson is a customer service expert who loves to share his strategies and techniques in the research industry. He’s active on social media platforms and uses it as his gateway to promote advocacy in advising future business owners and entrepreneurs.