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How do I Maximize Supply Chain Efficiency?

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  • Written By: Bradley James
  • Edited By: Kathryn Hulick
  • Last Modified Date: 12 September 2016
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    Conjecture Corporation
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Supply chain efficiency is one of the most important factors of success for profitable organizations. The goal of the supply chain, in a nutshell, is to keep costs low while maintaining a high level of quality. This is the supply chain manager's conundrum. The more efficiently the supply chain organization can do this, the more effective it will ultimately be in increasing supply chain efficiency. In practical terms this means creating more agile systems of work-flow.

Technology is at the forefront of faster demand cycles. The supply chain uses technology to increase the organization's ability to respond to customer orders. If new products are of poor quality or if the current offering costs more than a competitor's products, sales will decline. There are two distinct ways to address these issues: better vendor relationships and increased use of supply chain technology.

New product introductions can be a nightmare or a dream come true for the supply chain organization. If the inventory needed to create the product is unavailable or difficult to find, product demand may outpace product supply. As a result, competitors may pick up a new customer and gain additional market share. However, if the inventory is available and the new product allows the organization to improve contract prices by purchasing more of the same inventory, the event can be beneficial for management. The right software application mixed with a good quality management solution can help to manage both events effectively.

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In general, quality management systems are designed to help improve supply chain efficiency. They do this by helping those involved in supply chain processes to identify opportunities to create efficiencies by mapping out the process from end to end. This also helps supply chain managers to create a common language for different functional groups involved in the supply chain process. Thankfully, most supply chain quality management systems can be implemented with the help of robust software applications designed specifically to increase supply chain efficiency.

Changes in demand for current products can also be an issue if vendors are not managed effectively. If demand increases for inventory, supply chain vendors have more power in the relationship and can raise prices. Organizations combat this by either having more than one vendor for inventory and/or developing deep relationships with sole sourced vendor contracts. The former requires less investment, but is not as cost effective over the long run. Ideally, both strategies should be used.

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