Supply chain strategy is also known as supply chain management strategy. It is theoretically defined as “an iterative process that evaluates the cost-benefit trade-offs of operational components.†It involves a coordinated movement of productions and services from the supplier to the distributor.
The major functions involved include procuring the raw materials, developing the product, core marketing, operations, distribution, finance and customer service. Supply chains also play a seminal role in determining the financial health of a country.
But why is supply chain strategy important? Supply chain strategy ensures that the customer is satisfied and improves the overall financial position. From the point of manufacturing to the point of consumption, the strategy plays the primal role. Supply chain executives overall are under pressure to develop more efficient, customer-centric chains simultaneously looking for innovative ways to reduce costs as well as enable growth. Effective strategies coupled with a comprehensive plan allow a holistic professional fulfillment.
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Now that the concept and the integrality of the supply chain strategy have been comprehended thoroughly. Here are the ten best tips with which you could improve your supply chain strategy:-
1) Improving the distribution network
The distribution network of a company is an operational hinge. Distribution is an aspect that has a direct impact on everything. – starting from the delivery tracking to the strategy of sales. In order to improve the distribution network, an overall holistic view is required. The component elements should work in sync. For example:- You should check whether your purchasing software and your delivery system syncs well. Is the communication with the concerned warehouse management optimum? You could well identify changes. You could use group charts, graphs as tools.
2) Tracking the inventory
You could either use tracking software or the internal spreadsheets designed to be updated with the whereabouts of your inventory. This aids in understanding how much of a product is available, what is required, in case if there’s damage or decay. It is crucial that the staff involved are aware of the process. Other things to check would include location, raw materials, etc.
3) Monitoring the cash flows
It is extremely important as well as a beneficial tool. It is crucial to track the payment terms and conditions with several groups within the supply chain. This aids in planning as well as an understanding of means, technologies, and methods of transaction. You need to know how to pay, payment tools, how often to pay.
4) Devising an efficient distribution strategy
An efficient distribution strategy is a seminal part of the supply chain strategy. It reduces the degeneration of the product and enhances customer satisfaction. Devising an efficient blueprint could be highly rewarding.
It is to be thought out strategically. While doing so, you need to keep a check on the overall production facilities, warehouses, and cross-docks. Further, a goal is to be set for the distribution. The plan has to coordinate with the entire supply chain strategy for effective execution.
5) Controlling the operational expenses
In many companies, the operational side of things requires improvement. There can be reasons for incorrect supplies. Instead of merely the correction of the relevant order, evaluation of the point of the discrepancy is important. This will prevent the recurrence of errors.
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6) Standardizing Processes
It is the key element that allows a supply chain strategy to succeed. New and advanced ERP systems, as well as SCM functionalities, feature automated purchasing.
This implies that ERP software could be programmed to place orders automatically with vendors when inventory levels go below a given level. Maintenance of inventory levels constitutes an important part.
Automatic purchasing further reduces the load of the employees, allowing them to focus on other important duties.
7) Increasing transparency
Waste, errors, and fraudulence are perennial problems of the supply chain strategy that can be fixed with the appropriate ERP system. A major issue is the reconciliation of the software with the physical inventory counts. Products and units are often forgotten. This is to be kept in check to enable optimum transparency.
8) Gaining data insight
Decision making for the supply chain strategy duly depends on accurate and timely data and information. Having authentic visual reports available provides valuable insight into the success of your supply chain strategy.
9) Raising cost awareness
A centralized financial data is beneficial because it points when and where the concerned organization is spending money. This, in turn, encourages communications related to cost. It’ll boost strategies to consolidate expenses and process streamlines.
10) Setting performance benchmarks
You need to provide incentives to the supply chain organization in methods that would deliver maximum value to your company. It implies you need more than the conventional metrics of cost, capital, and services. The key performance indicators (KPIs) to a great extent depend on the demands of the business, as well as the product or service, and the concerned market segment. That includes the production cost for value, stable supply of integral products and staple items. Flexibility to deal with fluctuating demands in volatile markets, the launch of a new product is really important. There is no need to enforce a metric which does not suit the needs of the concerned corporation.
The following tips will definitely enhance your supply chain strategy and ensure a holistic profit and overall growth of a given corporation.
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