The events of 2020 put supply chain and logistics operations to the test across the country. Within the first nine months of 2020, 52% of disruption scenarios escalated to a “war room” situation meaning that potential threats lead to an increase in monitoring.
60% of survey respondents (also included in this report from Finances Online) said that improving efficiency and effectiveness is the preferred way to approach supply chain disruptions.
The big question moving forward is, “Are you prepared?” Though we have no crystal ball to reveal what 2022 has in store, we are best prepared for what’s next when we choose agility.
Whether you’re planning for next quarter or next year, there are some fundamental optimization practices to consider when mapping out a future proof strategy. We’ve curated top insights from the world of supply chain and logistics optimization.
What is Logistics Optimization?
Logistics optimization is all about achieving efficiency with interaction in partnership with external entities such as suppliers, vendors, and customers. The core components of logistics optimization are product movement, information movement, service time duration, costs, and integration. The overarching goal in logistic supply chain management is to cut costs, reduce waste, and improve service across the board.
Supply chain management oversees the flow of goods and services which includes the transformation of raw materials into finished products. Supply-side processes are streamlined to maximize value and keep pace with the competition. It involves the central control of a product’s manufacture, distribution, and return (if defective or in excess).
Ecommerce logistics is at the later stage of the supply chain progression as inventory is stored and awaiting picking and packing for online orders.
As the supply chain evolves and becomes better integrated, we progress toward a global network that is better prepared for unprecedented events.
Benefits of Optimizing Logistics and Your Supply Chain
The objective of process optimization is to yield measurable benefits. Unexpected positives may arise from improvement efforts, but here are a few examples of typical logistics optimization outcomes supply chain managers can look forward to.
Workforce Efficiency
The overarching goal of the supply chain is to deliver goods as efficiently as possible and we can’t do that without our workforce. Time is a finite resource so how each worker spends their time has an impact on serving customers. Through automation, workers get more work done with improved accuracy.
Cost-Effectiveness
Synchronizing and automating supply chain infrastructure eliminates redundant processes. This reduces waste and extraneous costs from transaction execution and labor.
Ideally, inventory optimization means a reduced opportunity cost from prolonged storage and the mitigation of product waste from write-offs. On a related note, optimized manufacturing reduces the amount of returned product that also results in losses.
Improved ROI
When each component of the supply chain is optimized, this reduces the disruptions that impact ROI. Perfecting each stage of the production process has a ripple effect. For example, “perfect orders” yield an incremental increase in revenue.
Additionally, satisfied customers are more likely to reorder. So when you deliver a product on time and in perfect condition you increase customer retention revenue through logistics optimization. If your revenue is on the rise at the same time your operation costs are decreased, indications of improved ROI should follow.
Supply Chain Optimization Tips
Logistic supply chain management optimization strategy is all about identifying improvement opportunities and outlining actionable steps. Applying these tips helps supply chain managers make more effective decisions.
1. Corporate Cards for Supply Chain Purchasing Decisions
Although it is an antiquated practice, invoicing is still a part of B2B logistic operations and the supply chain. When payment is slow between entities, this halts production and transit.
Corporate cards make payment more efficient so that funds are available to you sooner for business cash flow and goods can be transferred faster. What payment methods can you implement that will expedite payment with other supply chain partners?
2. Improving Current Operating Infrastructure
Consider your individual impact on the supply chain at large, especially the other entities you work with on a routine basis. Changes you make will either make your operations more or less compatible with other connections in the supply chain.
Keep your finger on the pulse and watch for trends related to your part of the supply chain and be prepared to adapt wherever necessary. When everyone does their share, infrastructure improvements positively impact the supply chain as a whole.
3. New Collaborations That Increase Productivity
When suppliers, manufacturers, and retailers come together on eCommerce logistics and supply chain optimization plans, data-driven forecasting and inventory management become a collaborative process.
Working in silos is the old way with a more integrated networking structure taking its place. Invest some time on outreach with your partners in the supply chain and open a discussion on ways you can work together to achieve better supply chain performance overall.
4. Process Optimization through Software and Tools
There is no magic wand for supply chain and logistic operations management, but intelligent tools and software come pretty close. Supply chain optimization software is designed to help you plan and think through complex processes and scenarios.
The Best Logistics Optimization Software and Tools
As the demand for software persists, newer and better tools will come to fruition in the coming years. Below are supply chain and logistics optimization software categories for you to consider for future planning.
Warehouse Management System (WMS) – This allows you to track inventory, optimize storage planning, enable pick-to-light functionality, automate documentation, etc. AR (Augmented Reality) and IoT technologies are leveraged to facilitate warehouse management.
Lean Inventory Tools – Storing excess inventory is inefficient and tends to be expensive. These tools work to minimize the burden of inventory. For example, the just-in-time (JIT) production method minimizes inventory by only manufacturing products on demand (such as 3D printing).
Transportation Management System (TMS) – Logistics management uses this platform to manage their fleet workflow and streamline the processes related to it. The objective is to reduce costs and improve delivery to customers through logistics optimization. A TMS can plan optimized routes, track and monitor transit in real-time, provide automatic reports to customers, conduct automated follow-up, etc.
Shipping Status Tools – All shipments are tracked in one hub. Get real-time tracking updates and receive alerts when the shipment is complete or if delays arise.
Supplier Management Tools – The more suppliers you work with, the more challenging it is to keep track of them. This tool allows you to manage your budget without disruption as you swap suppliers or renegotiate pricing agreements.
CRM System – You wouldn’t have your business without your customers. A CRM is where you manage your relationships with them. It includes a customer database, sales process management, details pertaining to customer orders, and data insights.
Order Processing Tools – Simply put, this streamlines the ordering, billing, and fulfillment process. Some platforms are equipped to integrate inventory information.
eLearning platform – To fully implement optimization plans, workers need to be up to speed on protocols and new procedures. eLearning modules train your workforce in a cost-effective way. Training best practices improve customer satisfaction and help your organization stay in compliance with laws and regulations.
Task Management Software – There is plenty of work to go around in your facility. This software creates and assigns tasks, promotes internal communications, monitors worker performance, and confirms task completion.
Demand Forecasting Tools – Past trends predict future needs. A demand forecasting tool gives you the insights you need to make adjustments to such fluctuations. Ideally, this tool enables you to prevent stock shortages during peak demand or too much surplus during a slump.
Analytics and Reporting Tools – Errors and gaps in your processes are not always easy to spot. Data insights empower you to identify problems so you can swiftly address them. It can also reveal other improvement opportunities. Also, you can generate reports for other shareholders and team members.
Security Features Tools – You keep your inventory and assets under lock and key, and you should do the same with your data. Protect your business, your partners, and your customers with the right data encryption and cybersecurity tools.
Compliance Tools – Quality assurance and safety are ensured by corporate protocol and government regulations. Organizations tend to become lax on policy and procedures enforcement over time. Compliance tools are an effective way to maintain proper operations so unfortunate consequences don’t creep up on you.
Final Thoughts on Supply Chain and Logistics Optimization
The longer you’ve been in the logistics and supply chain industries the more likely it is that traditional practices are ingrained in how you have performed. However, the old way of doing things is fading away rapidly.
As we continue to grapple with unprecedented events that make a significant impact, we’ve come to realize that we need a more sophisticated supply chain infrastructure that can cope with uncertainty. New technology and innovation showed up right on time to meet these modern challenges.
As you adapt your operations to this brave new world, Adia remains agile right alongside you. While many conditions in the supply chain may be unpredictable, we are your reliable source of on-demand warehouse staffing and contract labor. Book a demo to learn about how our robust platform empowers you to avoid disruptions
