In an effort to counter the costs of meeting ever-rising customer expectations, businesses are increasingly searching for inefficiencies in their supply chain. The reality is there is almost no room for inefficiency in the race to stay competitive by keeping prices low while providing an exceptional customer experience.
Every organization realizes the importance of the supply chain in the overall health of the company. However, many are unsure of how to start optimizing their supply chain. It can seem overwhelming, even unapproachable, because that term casts such a wide net. Where, exactly, should you start?
Here are four steps you can take to get a supply chain optimization project off the ground:
- Craft a strategic plan. Building a plan should include looking at your current productions levels and identifying an area of focus. For example, perhaps you want to improve inventory accuracy to 99-plus percent. Follow an established model that will allow you to measure the results of a new process meant to increase inventory accuracy.
Remember that a supply chain is comprised of three key components: people, inventory and processes. People and inventory are generally fixed costs – there is a certain price for each that cannot be lowered. Processes, however, are variable. If you discover a better way to execute a task, that can result in real savings that benefit the entire business.
- Set up a Supply Chain “Center of Excellence.” Once all parties have agreed on a strategic plan, it’s smart to establish a group of employees tasked with developing innovative ideas and figuring out how to execute them. For a small company, a Center of Excellence (COE) could be a handful of employees who devote only a portion of their time to this exercise. A bigger company could rotate promising employees into the COE for a set period of time to make sure it is a continuous source of innovation.
This group will refine the goals within that plan to make sure they target initiatives with the greatest potential for immediate savings. The COE can also track progress against these goals and publicize it to key decision-makers across the business.
- Put new processes into place. At this point, it’s time to execute on the processes that will enable the company to see the desired results (or at least start moving things in the right direction). Every party involved must be clearly informed of their exact responsibilities to maintain accountability. Everyone should also be on the same page about what methods will be used to measure success.
- Analyze the results. This is when you take a step back to see what you’ve accomplished. What were the effects – negative or positive – of the new processes you implemented? It’s possible that in an effort to fix one problem, you created another. But you can figure out what created that new problem and adjust the process accordingly. The final result should still be a net positive, and you have the data to prove it.
With the help of a supply chain expert, HighJump developed an eBook, Your Supply Chain: From Cost Center to Strategic Differentiator. The eBook takes a deeper dive into each of these steps. It digs into the best-in-class models that will help you at different steps and offers examples that will allow you to see how what starts as a promising idea can transform your operations.
Given the competitiveness and challenges of today’s environment, every business should be focused on identifying and resolving any kinks in the supply chain that are hurting the bottom line. It’s the only path to long-term growth, because the number of hurdles companies face will only increase. So download a copy of this eBook today, start building a more efficient supply chain and watch your organization pull away from the competition.