Basics Concerning Supply Chain Optimization -


Basics Concerning Supply Chain Optimization

By Rebecca Jones

The supply chain is the system by which information, financial resources and products move from the supplier or manufacturer to the end consumer. There may or may not be intermediaries depending on the nature of goods or services involved. Such intermediaries include retailers and wholesalers. Proper management of this chain is needed for the business to realize maximum benefits. The process of getting the most out of it is known as supply chain optimization.

A number of factors determine the complexity of a supply chain. These include, for instance, the type of business in question, the processes that have to be carried out for the product to reach the consumers, the size of the market (local or international) and the type of technology that is employed. The advancement in technology that has taken place in recent times has helped increase the interaction between the major players (manufactures, suppliers, retailers and consumers).

One has to use a various tools and process to achieve optimization. Some of them include tools that minimize operation costs (manufacturing, transport, storage and so on), inventory management tools and monitoring and evaluation processes to determine the progress being made. Regardless of what is done, the aim is to have products delivered to the end consumer by incurring the lowest costs possible while reaping as much profit as possible.

The utilization of mobile-based technology can improve various aspects of the chain. Such will include field sales, marketing as well as provision of direct services to consumers. Through the mobile-based technology specific product information such as item origin, contents and manufacturing methodology can be obtained by prospective consumers. Since some consumers are quite sensitive about sustainability, information on the same can be easily communicated through the same platform.

One of the most important things that you need to do if you intend to have successful optimization is to predetermine product demand as accurately as possible. This is achieved by studying historical demand for the product and anticipating future events. If possible, attempt to get information relating to aggregated data such as groups of customers and types of products.

Before you undertake the optimization exercise you first need to thoroughly analyze your company to determine its strengths and weaknesses as relates to the supply chain. For the areas that you notice that you have no capacity to handle optimally it is a good idea to outsource the same to more specialized companies. Companies that are specialized in these areas will spend less in achieving desired results than those that are not.

Appreciate that the process of optimizing can be long, tiresome and frustrating. Always ensure that you have a global mindset when making decisions. This means that you consider the chain in its entirety and not just one aspect when making decisions. Every time a change is made evaluation should be done to assess impact that it has created. This can then inform your next move.

When a supply chain is optimized, there are a number of advantages that the business will have. Among them is the fact that the operation costs will be minimized and this will increase the profit margin of the organization. Another major advantage is better collaboration among all the players translating into faster inventory clearance.

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