One of the interesting things that came of the pandemic was the popularity of sourdough baking. First-time sourdough bakers quickly realized it took patience and lots of practice to make the perfect loaf. Anything from water temperature to fermentation time to how you score loaves could affect the quality of the bread. But with experience, you commit fewer mistakes, prep time becomes faster, and your product becomes better.

Supply chain managers face a similar experience in supply chain optimization. But instead of nurturing a sourdough starter, you foster relationships with suppliers and partners. Instead of changes to the temperature of your kitchen, you’re tracking the temperature and behavior of the market. And instead of keeping a watch on your baking time, you’re monitoring obstacles to speed and efficiency in your supply chain.

Constantly Tweaking the Recipe 

Supply chain optimization involves constantly improving and refining people’s capabilities, business processes, and technology to consistently deliver what customers expect in the most efficient way possible. Like a secret recipe, each supply chain is unique, and there is no one-size-fits-all approach to optimization. A good starting point would be to examine your current challenges or vulnerabilities. Some areas worth considering are:

  • Demand forecasting: How accurate are your forecasts? How have you adjusted them to account for shifts in consumer spending habits?
  • Inventory Location: Are your warehouses strategically located? Can inventory easily reach your customers?
  • Customer expectations: How are you performing against current customer expectations of faster and more responsive service?
  • Expediency: How can you speed up the supply chain? Are you encountering area-specific obstacles/bottlenecks?
  • Risk reduction: What parts of the supply chain are at risk, given the heightened unpredictability of events? How resilient is your supply chain?

The Do’s and Don’ts of Supply Chain Optimization

DO’s:

Start with a reliable demand forecast.

Supply chain optimization begins with the demand forecast, which is the basis for your inventory and production plan. The forecast needs to be one that you can trust and rely on. A forecast that is too high can result in excess inventory and overstaffing, while one that is too low may lead to stockouts, unhappy customers, and opportunity loss.

Invest in a demand forecasting solution that detects short- and long-term demand based on internal and external signals while helping you track critical performance metrics. Algo’s demand forecasting solution, for example, uses human-centric machine learning capabilities to produce highly accurate forecasts.

Collect and analyze data from across your entire supply chain.

Data is often scattered in silos across the supply chain. One way to break down those silos and gain end-to-end, real-time visibility across the supply chain is by implementing a control tower. Control towers provide the various supply chain participants common visibility into the state of the supply chain, allowing them to collaborate more easily. Those with advanced data analytics and reporting capabilities can help to pinpoint where issues occur or predict potential problems.

Strengthen partnerships and supply networks.

Partner management is an essential part of supply chain optimization. Companies should continuously monitor partner performance to ensure that resources are invested with those who are aligned with their goals and objectives. Channel Management solutions provide insights to help maximize profitability on both sides and prevent and respond to risks effectively.

Automate your supply chain to improve efficiency.

Technology can take the work out of what would otherwise be very tedious and repetitive tasks. Automating components of your supply chain can speed up processes and minimize human error.

DON’TS:

Don’t treat supply chain optimization as a one-time deal.

Establishing a robust supply chain is not a one-off deal. A period of success does not guarantee the same for the future. The business environment is constantly changing, and technology advances constantly reshape the way businesses operate and respond to demand. Keeping in step with developments is no longer an option. Staying in business now also means staying ahead of the curve through continuous optimization.

Don’t ignore the human side of the supply chain.

The human side of the supply chain – such as partner relationships and negotiations – cannot be discounted in supply chain optimization. However, it is critical to have an objective and data-driven evaluation of how suppliers contribute to overall performance.

Don’t obsess over cost advantage.

Resiliency also means being able to substitute a more expensive alternative for one which has become untenable. Such instances include selecting a costlier freight forwarder with more extensive routes to a less expensive one limited from operations.

Baking to Perfection

The pandemic exposed several vulnerabilities in supply chains worldwide, but at the same time, presented opportunities for supply chain managers to step up in optimizing the supply chain. Today, there is a wealth of knowledge to draw from and technology available to support continuous, data-driven tweaking and fine-tuning of the supply chain. This brings you closer and closer to supply chain resilience and the levels of efficiency that you need to stay competitive.

The pandemic isn’t over, and supply chains are likely to face more disruptions in the coming months. The practice of supply chain optimization is one of the ways that companies can keep the burns to a minimum and enjoy the sweet smell of success.

About the author

Algo

Combining human centered AI with deep domain expertise, Algo’s analytics enriched supply chain intelligence platform helps suppliers and retailers plan, collaborate, simulate and execute a more efficient supply chain.

Recommended for you