From toilet paper to baby formula shortages, the importance of supply chain management is deeply felt following the COVID-19 pandemic. Everyday non-specialty items simply aren’t built to handle demand fluctuations. Generally speaking, supplies like these are restocked continuously and usually handled in the most cost-effective way. Therefore, an effective and efficient supply chain management system was not on the radar for most businesses during this time. Pandemics, epidemics, and even times of war reveal how fragile supply chains are. But it shouldn’t take serious events to trigger prioritizing effective and cost reduction strategies for your supply chain management of finished goods. The manufacturing of specialty supplies for energy, medical devices, robotics, semiconductor, and aerospace industries presents an opportunity now more than ever for more resilient supply chain solutions that generate profits and increase efficiency.
Supply chain management is the management of the flow of goods and services, which includes raw materials processed into final products. When an effective supply chain exists for businesses to supply products to their customers efficiently, this gives a business a competitive edge.
Effective supply chain management offers significant benefits to companies large and small. One benefit is the ability to cut excess costs and bring speed to go-to-market plans. Because consumers get their products quickly, they are more likely to have high brand loyalty and become repeat or referring customers. Additional benefits from a 2022 compiled survey by American Express include:
Better collaboration with suppliers - flexibility matters and this enables businesses to handle any market or supply chain fluctuations
Better quality control - quality management systems play a large role here and will help detect risks before they become issues
Shipping optimization - different delivery and shipping streams lead to inefficiencies, and reducing and aggregating this through one central supply chain solution is key
Reduced inventory and overhead costs - maintaining an inventory level will help support a resilient supply chain
Improved risk mitigation - visibility of the end-to-end supply chain process helps prevent or be proactive in risk management
Stronger cash flow - incorporating supply chain management solutions and improvements will maintain a strong cash flow
A more agile business - suppliers and experienced manufacturing partners matter to help you scale up when and how your business needs to
Better visibility and data analytics - real-time data and metrics by business or manufacturing partners who manage suppliers will empower your business to optimize
What are the effective ways to minimize supply chain costs?
The most effective way to reduce spending across the supply chain is to evaluate the opportunities that will improve productivity and efficiency. Different businesses will have their own set of goals and constraints.
In general, six supply chain models exist:
Continuous flow model - most traditional and mostly used for commodity manufacturing.
Fast chain model - a flexible model for companies with products that fluctuate with trends.
Efficient chain model- an efficiency model to help companies in a highly competitive market.
Agile model - a common model used for companies that have specialty items.
Custom-configured model - a mixed model of agile and continuous to help companies that need more assembly and production.
Flexible model - an on and off model to help companies that have variation between periods of high demand and low volume demand.
These models are created to help a company be more efficient or more responsive. Developing the right model and supply chain management process may take experience, time, and a thoughtfully designed strategy. That’s why many companies now look to outsource their supply chain management.
How can speed improve profits in a supply chain?
Various process controls enable speed, which in turn generates faster profits. The following are just a couple of areas that can be managed by the right resource or experienced supply chain manager:
Internal inventories, production, and operations
Warehouse storage and distribution
Company vendor management (domestic and overseas)
Payment agreements with suppliers
Sales and customer cash control
Big chains like Walgreens Boots Alliance Inc. continuously seek ways to bring speed to their supply chain and improve their profits. It is not an overnight accomplishment. Once company investment and focus in the right areas with the right people are made, the results are financially significant in return.
What is the future of supply chain and logistics?
With inflation rates reaching 7.1% in December of 2021, their highest in 40 years, how to better manage durable goods, operations, and logistics is a highly sought topic for both large and small businesses. It’s important to get ahead to achieve efficiency and profitability from your supply chain management process.
According to the Association of Supply Chain Management (ASCM), there are 10 supply chain management trends to watch for in 2022 and beyond:
1. Advanced analytics and automation
2. Supply chain talent
4.The rise of e-commerce
5. Supply chain resilience
6. Supply chain agility
7. Digital supply chains
10. Artificial intelligence and machine learning
Supply chain management solutions are vital to any product materials-focused industry. And, the end-to-end process can be optimized to generate profits and increase efficiency for your business. Consider additional solutions like outsourcing tasks that are more specialized to achieve these goals. This gives more in-house resources the ability to focus on innovation and fulfilling new business strategies towards emerging trends and unexpected supply and demand situations. Also, with more experienced and logistically connected partners, your business will profit from increased efficiencies and gain a more competitive advantage.
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