How to Build the Foundation for Supply Chain Optimization

Posts, Supply Chain

An optimized supply chain is essential for the overall profitability of your business. But before you can begin the process of supply chain optimization, you need a foundation to work from. Deploying with the right initial elements will help reveal bottlenecks in your supply chain so that you can address them and increase efficiency.

Therefore, before you take your excavator and start digging, let’s review what you need to be successful.

Foundational Elements for Supply Chain Optimization

1. Understand Your Situation with Data

An effective supply chain foundation is built on reliable data that is consistent and accurate, not gut instincts. You need data to understand what’s wrong in your supply chain and effect changes. Since the optimization you perform is only as good as the data you have, having the right data is critical.

Finding the right information requires you to know the ends and outs of your data. You have to know the facts — what data is being captured, where it is stored and how it makes its way to you. Once you understand the data architecture in your supply chain, you can then identify what you want to achieve and the problem you’re trying to tackle.

2. Get the Right Tools

To achieve real supply chain optimization, you need advanced technology to mine data in real time across all points in your supply chain. This will give you complete end-to-end visibility, help you understand the root causes of performance issues and implement the right changes. While there are many supply chain technologies in the market to choose from, employ modern and connected supply chain tools that gather the key event data from all aspects of the supply chain. Often this data must come from critical partners and vendors who manage aspects of your supply chain flow like brokers or transporters. Accessing these pieces of your supply chain is critical for getting a complete picture.

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3. Use Analytics to Get Insight

Having data is of little use unless subjected to proper analytics. Leverage advanced analytics to find meaningful patterns in the vast mountains of data produced by your supply chain. Two forms of analytics that can help you get the most from your data and optimize your supply chain are predictive and prescriptive analytics.

  • Predictive analytics addresses what will happen in the future if specific actions are taken.
  • Prescriptive analytics analyzes data to predict future scenarios and makes data-based recommendations on what should be done in a particular situation on the spot.

4. Plan Holistically

An essential foundational component of supply chain optimization is planning. Supply chain planning should be holistic and include production planning, demand planning, sales and operations planning. Ensure your strategy establishes a link between long-term goal planning, mid-term financial planning and day-to-day operational planning. Also, involve key executives in your supply chain planning to ensure your strategy is understood and followed by all departments.

5. Be Agile

An optimized supply chain is one that is agile enough to respond to changes in customer demand or supply chain disruptions. Leverage supply chain technology such as analytics, sophisticated sensing and planning tools to create “what-if” scenarios to plan effectively so you’re ready when disruptions occur. For instance, demand forecasting platforms analyze customer data in real time and predict future demand. This ensures that you don’t get hit by unexpected spikes and have the right amount of stock to meet customer demands.

If you’ve had supply chain failures in the past, analyze those failures to find out where things went wrong and use the insight you gain to optimize your supply chain.

It’s Time to Start Digging

Building a solid foundation for your supply chain optimization is no easy task. I hope the points discussed help you construct a robust supply chain that will minimize your costs, increase efficiency and meet customer expectations.

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