Supply chains are multifaceted and can be a significant source of competitive advantage. To improve supply chain management efficiency and effectiveness, companies must improve predictability, optimize costs, minimize working capital, mitigate risk, and analyze data.
Companies that strategically improve even one area of the supply chain create a ripple effect of operational advantages. A resourceful, successful supply chain helps businesses save money – from faster delivery time, shorter factory processing time, and better inventory management.
What is supply chain management?
Supply chain management is a compound process involving the organization and execution of product flow from the supplier to the final customer in the fastest and most efficient way.
The role of logistics in supply chain management
Supply chain management is often confused with logistics management. However, logistics and transportation are only a part of the overall supply chain. Logistics coordinates the transportation of goods within the supply chain. Transportation is a critical component in the entire product flow, and it is more of a glue that sticks every aspect of the supply chain operations together. Therefore, a robust logistics strategy can contribute to increased efficiency and ensure your supply chain survives in the long run.
What is supply chain efficiency?
Well-built supply chains improve margins, support expansion, drive positive consumer experiences, and reduce operating costs. However, determining the best way to move a product to its destination takes optimizing order processing, receiving procedures, outbound schedules, and reverse logistics.
It should be the utmost priority for any company to be the most efficient in the industry and not look at themselves as just being sustainable. Supply chain efficiency is an organization’s core standard of performance. Efficiency measures the ratio of work performed in a process and whether the process is using the best practices and making the most of the available resources. An adequate supply chain also uses any available resources in the best way to meet a customer’s demand at the lowest cost.
The difference between supply chain efficiency and supply chain effectiveness
Supply chain efficiency is the internal standard that an organization has and what its performance of that is. However, supply chain efficiency does not always guarantee effectiveness. For example, a supply chain might efficiently lessen costs, but it’s ineffective if the end consumer is unhappy with the product. So, an effective supply chain focuses on the outcome and external standards. On the other hand, supply chain effectiveness is the external standard of performance in an organization.
The role of distribution networks in supply chain efficiency
A distribution network is a company’s system to get products from the manufacturer to the retailer. Companies that leverage the supply chain as a strategic capability have built a durable distribution network. A fast, reliable network is a competitive advantage because customers can get products whenever they want them.
Today, the trend is for distribution centers to be close to major markets to reduce inbound and outbound miles. “The ability to get a product to market in 1-2 days when your competition can only deliver in 3-5 days is a serious weapon,” says Wulfraat, President of MWPVL International.
How to improve supply chain management efficiency
For an efficient supply chain, companies create reliable transportation solutions. A supply chain requires alignment and a cohesive strategy at each step in the process. Work with experienced partners and assemble a dedicated team within your organization to create and optimize your efficient supply chain.
Make the supply chain more visible for everyone
Once a supply chain is transparent for everyone to see, it will be easier for the company to spot any issues and overcome them efficiently. Visibility means having a clear outlook on each activity and process that is taking place in the supply chain. Once a company finally has a clear vision of its inventory, it can respond to any unexpected changes with customers or in the process in a better way. Making a supply chain more visible should always include Transportation Management System (TMS). A TMS allows your company to do many things. Still, significantly it can lower costs with quick access to the best carrier price, increase visibility into shipments, optimize the supply chain with real-time transportation data, and quickly schedule carrier quotes for customers.
Another essential tactic to improve the visibility of the supply chain is making your IT department more involved. With supply chain efficiency, you can consult IT about changes to your current shipment tracking software that could streamline their supply chain processes. In addition, your IT team can help you stay ahead of the competition by providing innovative new solutions for your tracking. If your company does not have the resources to create a TMS or other tracking software, you can always partner with a 3PL like PLS Logistics Services, which offers an in-house TMS called PLS PRO.
Carrier networks and what they provide
Carrier networks work with shippers or 3PLs to transport goods using different modes of transportation. Motor carriers can provide a lot for companies. Carriers account for 82 percent of US freight expenditures. In addition, they have high accessibility and fast transit times despite their relatively high cost. Each carrier network is the backbone for any shipping company since this is the source of where goods are delivered and shipped out by companies.
Carrier networks allow shipping to be more efficient for everyone involved and ensure that the goods get transported. As a result, businesses are always looking for reliable carriers to move their products on time.
3PLs and transportation
Partnering with 3PL experts can benefit companies by reducing freight rates, increasing trucking capacity, and adding additional visibility into the supply chain. One significant advantage is that 3PL will take the headache out of shipping by relying on freight brokers to connect you with the carriers. They can also work with your company to reduce shipping costs and delivery times. A robust carrier network empowers a company to minimize shipping costs and increase service levels with little disruption to any processes. Also, an effective transportation network starts with shipment visibility. Visibility improves routing, capacity, and profitability. The ways to improve can be different for every company.
Always look for ways to improve
Supply chain efficiency is an ongoing process and is not just something you do once, and you have that efficiency for a lifetime. Anything can happen that disrupts an operation due to an internal process or the environment. A company should never get caught up and be unable to fix internal and external issues that other companies can easily do. As a result, it is essential to always look for ways to improve inefficiency.
PLS is one of the country’s leading logistics services providers. If you need help and expert consultancy with your supply chain management, you can get started by requesting a freight quote today!