A near miss on a nationwide rail strike, Amazon’s pause on its logistics network expansion, and a seemingly endless heatwave withering produce supplies across the country have given chief supply chain officers (CSCOs) plenty to manage as another unprecedented year for the supply chain industry wobbles into its final quarter.
Chronic supply chain disruption has left many aspects of global supply and demand consistently unpredictable, while consumer expectations remain at an all-time high. But there are a number of things CSCOs can do to help their companies plan more efficiently and remain resilient during the turbulence.
1) Increase Supplier Diversification
It became clear during the pandemic that an over dependence on a single, primary supplier or tight group of suppliers was a perilous risk for most companies. For global buyers, sourcing suppliers from one predominant country like China left many companies empty-handed with no alternatives. Shipping costs spiked by nearly 600 percent and companies scrambled to find foreign suppliers with enough product to satisfy demand. Those challenges are still plaguing the supply chain industry.
Diversifying suppliers is now an obvious action step. Supply chain diversification across regions and product suppliers builds a stronger “what if” scenario that allows companies to be nimbler when disruptions occur. An important part of that diversification is scenario planning and the adoption of technology and software platforms that can unite multiple supplier networks. Platforms can offer clearer visibility across a company’s entire supply chain and help identify weak links more quickly and accurately.
2) Lower Logistics Costs
Multiple factors can bear down on logistics costs, including the market cost of fuel, the labor market for commercial drivers, international trade regulations, delayed port arrivals and other supply chain disruptions. But developing a strategy for lowering logistics costs is a tangible and effective way to significantly improve operations.
Logistics costs can be chipped away using multiple tactics, including optimizing inventory levels, and taking a sharper look at all areas of a supply chain from transportation and warehousing to fulfillment and labor. Improving customer satisfaction can also create impact. Offering free shipping can reduce the rate of cart abandonment and increasing the average value of an order can help offset those shipping costs, for example. Automating warehouse and logistics processes is another effective way to clip logistics costs.
One of the leading ways to influence logistics costs is through more informed decision making. Advanced technology and software platforms offer a 365-degree view of all logistics spending and can help CSCOs spot where spending can be cut or reduced. Technology-based solutions can also help operators create better processes within operations and more fully understand their entire supply chain.
3) Improve Demand Forecasting
In today’s world of unprecedented supply chain disruption, it can be extremely difficult to forecast demand. Either inventory supplies aren’t moving, or they are scarce. Forecasting errors have an enormous effect on the bottom line. Collective industry findings show forecast errors can increase costs from 10 percent to 30 percent. More accurate demand forecasting enables companies to keep correct supply quantities to meet both current and future needs and gain revenue.
Once again, technology has become a powerful ally. Machine learning and AI (Artificial Intelligence) are offering increasingly sophisticated approaches to demand forecasting and supply chain operation efficiencies. According to McKinsey & Co., applying AI-driven forecasting to supply chain management can reduce errors by between 20 and 50 percent and translate into a reduction in lost sales and product unavailability of up to 65 percent.
4) Increase Supply Chain Visibility
Businesses now need true end-to-end supply chain visibility to weather fluctuations and constant change. Companies must be able to account for every aspect of operations, from suppliers and partners to warehouses and shipping carriers. Real-time data is essential to providing a critical birds-eye view of the entire supply chain and of each granular node.
Modern supply chains rely on diverse supplier networks all over the world, so transparency also is vital.
Improving supply chain visibility involves creating maximum efficiency and collecting and using data insights in a comprehensive within a tightly focused strategy. According to the Brookings Institution, supply chain operators are leveling up on a number of key tactics, including better contingency planning, improving organizational readiness and worker flexibility, automation, building more collaborative relationships with suppliers and even trading lead supply chain designs for more decentralized network designs.
Simple steps also include identifying pain points and prioritizing based on strategic goals and objectives, becoming more adept at using technology, measuring, and improving based on KPIs.
5) Invest in Technology and Software
Most supply chain owners and operators have purchased and deployed multiple systems to manage operations. But many companies are still overly reliant on traditional spreadsheet-based applications. Even integrating Excel spreadsheets into an enterprise resource planning (ERP) system can carry risks that can prove costly.
The most successful operations gather real-time information and analytics that produce truly data-driven strategies. Comprehensive supply chain management solutions can handle all aspects of business, catching vulnerabilities, identifying unnecessary expenses, and creating a more holistic view of what it will take to maximize operations and revenue in a shifting industry climate.
ketteQ, and its team of experienced supply chain industry veterans, has been working for years to help its partners and clients adopt and deploy the very latest in technology solutions for supply chain operators. ketteQ is built in and deployed on Salesforce and AWS (Amazon Web Services) clouds, which means software is automatically and continuously updated.
Offering a single data model and architecture, ketteQ solutions present a single source of truth that deliver end-to-end visibility of decision-grade data from all sources and systems. The solutions can be deployed one step at a time, or as part of a comprehensive system overhaul, making it easy for busy CSCOs to get internal buy-in and ensure the most successful onboarding and results.
Preparing for 2023
Global unrest and continued weather and labor disruptions show no signs of stopping as the supply chain industry rounds the bend to 2023. All forecasts point to a continued state of fluctuation that has now become too common to overlook. The most successful supply chain businesses have continued to move to adopt new best practices or double down on the basic steps they know will improve management and results.
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