An Overview Of Supply Chain Network Optimization -


An Overview Of Supply Chain Network Optimization

By Helen Gray

Supply chain network involves a link of businesses that focus on moving products from the source to where they will be utilized. A business will want to create a strong and efficient supply chain network optimization if it is going to grow and make profits. It may decide to outsource, have off-shore industries, or manufacture products from its own premises. Whichever the choice it will be focused on solely on reducing production costs, increasing returns, and improving its reputation.

Companies that decide to outsource shift costs to the contractor. They will advertise tenders and finally award them to those who qualify. The contractor will take the risk of producing and transporting the goods to the point where they will be utilized. The products will be examined upon delivery and if they are of required quality can be accepted.

The team should evaluate the effectiveness and efficiency of products. They should give maximum yield as specified in their instruction form. Moreover, the products should resolve the purpose they were bought for or otherwise they would be useless to the buyer. The goods should also be made available in good time since it ensures everything goes to plan and there are no delays or shortages in the warehouse.

Having off-shore plant is another way. A company may opt to move its operations to overseas countries depending on various factors. It may want to reduce the cost of buying raw materials, training labor, and tax factors. This would help increase more returns, which would not be possible in the mother country.

Apart from the benefits, the company should also consider its risks. Off-shoring operations does not guarantee uniformity of products in the new country and that of origin of the firm. This is mainly affected by culture and language. The beliefs of one group are different with that of another. For instance, one may believe in hard work and living in honesty while another may not. In addition to that, if there is use of different languages people may not understand one another; hence, confusion.

The team may also decide to pick running of local industries. Here they will be able to monitor and consider the production process. This is because it will be internal and it shall be handled by one of their own employees. He will answer for any mistake made and also understand the goals of a company; thus, working hard will ensure he gets a promotion.

However, this strategy may prove difficult. If the business does not have enough capital, they find producing on their own to be difficult and opt for other modes. Besides, the cost of raw materials may be expensive and time consuming to look for them if they are not readily available. Training and paying the salary and wages of employees is also another variable. The company will also need to buy new equipment and prepare on how to repair and maintain it to avoid stoppage of production process.

Moreover, companies should not only consider cost and making profits, but also the impact of their products on people. Producing cheap products that are harmful shows lack of ethics and good morality. This also ruins their good reputation and customers will lack faith in them.

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