Empty shelves in supermarkets, delayed deliveries of online purchases, and massively fluctuating retail prices. These have become quite common even before the pandemic started.
But while supply chain disruptions may be inconvenient for consumers, it can be downright crippling to any business, as they lead to lost revenue, or worse, lost customer trust.
According to a GEP-commissioned survey, 64% of U.S. and European companies reported revenue losses of between six and 20% in 2020, with nearly half (45%) reporting that COVID-19 “significantly” disrupted their supply chain.
One way to minimize disruptions or offset its negative impact on your company’s profits is to reduce supply chain costs. But how can you exactly do that?
In this article, we’ll discuss three effective strategies you can implement to achieve this goal.
Improving End-to-End (E2E) Supply Chain Visibility
What is E2E supply chain visibility?
You can’t measure or improve what you can’t see. To this point, E2E supply chain visibility allows you to monitor each link of the supply chain, from procurement all the way to the delivery of finished goods.
By collecting data from separate parts and organizing it in a control center, you can review and analyze the entire process and use the information to improve overall business operations.
In most instances, E2E supply chain visibility covers six primary areas:
- Procurement and inventory management
- Quality control
- Sales and customer service
Full visibility in each of these areas is necessary for proper data analysis. It also ensures that team members have complete and accurate information they need to communicate and collaborate effectively, innovate and enhance product offerings, and optimize business processes to build value and support organizational goals.
Unfortunately, many businesses are not prioritizing supply chain visibility. According to Geodis’ Supply Chain Worldwide Survey report, only 6% of businesses reported that they have end-to-end supply chain visibility. In the few years since the report’s release, that number has not changed much.
How does E2E visibility improve supply chain performance?
- Full monitoring of supply chain processes yields clear and complete data for analysis, financial reporting, and evaluating supply chain operations using key performance indicators (KPIs).
- Real-time visibility promotes clear communication and fosters a collaborative approach between internal teams, key suppliers, service providers, strengthening supplier relationships, simplifying strategic sourcing, and supporting the development of shared initiatives for growth and innovation.
- Better visibility also simplifies concurrent process optimization and digital transformation initiatives.
- Improved responsiveness; major supply chain disruptors are more readily anticipated and mitigated, allowing more time to develop contingency measures or, better still, deploy those already developed using data analysis.
- Inventory management is improved through better demand forecasting, more accurate safety stock management, and turnover rate optimization.
Implementing Smart and Agile Sales & Operations Planning (S&OP)
Collecting and storing data may be the first step, but it’s not enough. To obtain meaningful insights, you’ll need to use intelligent interpretation that addresses each business’ individual needs.
Using advanced analytics and artificial intelligence (AI), you can get real-time insights from your end-to-end supply chain, allowing you to anticipate risks and opportunities and make quicker decisions.
Smart S&OP automates the entire process, from data gathering and analysis to forecasting and running simulations.
Digitizing Your Supply Chain
For all the effort that companies devote to improving the performance of their supply chains, relatively few have unlocked the full potential of digital technologies.
Innovations such as embedded sensors, GPS, and RFID have helped companies transform their existing traditional (a mix of paper-based and IT-supported processes) supply chain structures into more agile, flexible, open, and collaborative digital models.
What are the benefits of supply chain digitization?
Digital transformation in supply chain management provides organizational flexibility, allows business process automation, and accelerates innovation. To take full advantage of digitized supply chain models, it’s important that companies make it an integral part of the overall business model and organizational structure.
In a typical supply chain, the sequence involves sourcing and procuring raw materials and parts, designing and making a product, estimating the demand, arranging sales channels and logistics, and then providing customers with visibility into their orders.
A digital supply chain, in contrast, provides significantly more visibility into the workings of the chain. It’s the process of integrating and applying advanced digital technologies into supply chain operations, from procurement data, inventory management, to transportation and distribution. For instance, Bluetooth Low Energy (BLE) asset tracking can provide instant updates on location, including when the cargo is in transit.
The ultimate goal of supply chain digitization is to enable insights for greater efficiency and facilitate greater profits. Companies with digital supply chains can better move their resources, people, assets, and inventory to where they are needed at any given time to reduce costs.
The potential payoffs of a fully-realized digital supply chain include saving in every area, including time, resources, money, and reduced environmental footprint.
Reap the Benefits of Supply Chain Cost Reduction With Our Help
By having E2E visibility, advanced analytics, and the technology to automate the entire process, you can significantly improve your company’s overall efficiency, which translates to reduced costs and higher revenue. Visit Algo to learn more about the software system we use to optimize supply chains and how we can customize it to match your needs.