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The supply chain plays an important role in the strategic chain creation of a company’s values. Making the right choice when planning your logistics strategies and externalization offers you the most profitable ways and create value.
Due to the global pandemic (COVID-19) in 2020, the Supply Chain has proved its usefulness, particularly in the presence of a health crisis. Supply disruptions, closing logistics chains, division of the movement of goods, border closures, etc.
All this influenced companies to search for ways to adapt to the occurring crises to protect their businesses which generated the evolvement of the Supply Chain Management.
These effective and performant new methods that are newly developed, did help obtain a better performance and attaining better goals in the following year 2021.
Understanding the supply chain
The supply chain consists of different stages of a client's order, whether it is a product or a service, from manufacturing to delivery.
It is mandatory to include anything relevant to planning, execution, or even controlling the different movements concerned. The supply chain section included with getting the finished goods from the producer to the purchaser is known as the distribution channel.
In the entire supply chain we come across these different streams such as the physical, informational, financial and administrative ones.
It also includes research and development, product development, sourcing, production, logistics and systems to manage these activities.
The extent of supply chain management and analysis will rely on the complexity and criticality of the merchandise and services to the company's core business.
In the supply chain we come across different actors such as:
- Manufacturing and fabrication actors: that come from various departments such as the marketing, engineering or even the creation department, which are jobs that are combined into the logistics chain.
- Warehouse and Logistics actors: which consist of warehouse management, inventory management and logistics, these are other aspects of the supply chain. A warehouse entails the interference of construction industry players. Storage actors are warehousing agents, insurers, security guards, etc. For inventory management, there are storekeepers, forklifts, dockworkers, logistics assistants, packers, inventory managers and logistics managers.
- Transport actors: There are mainly actors such as the charterer, the routing agent, the transit agent, the transport control agent, the shunting agent, the transport operations technician, the declarant customs, the rental of industrial vehicles, the mechanic, the last mile transporter, etc.
The importance of Supply Chain Management (SCM)
The fulfilment of customer orders is important for a company, and it lies in an efficient and optimized supply chain. Accurate management can generate a decrease in all costs and a faster production cycle.
The SCM covers product development, sourcing, production, procurement, logistics and more when it comes to operations in the supply chain.
Deflecting it could put companies at the risk of a decrease of customers and losing a competitive edge in respective industries.
An efficient supply chain will work with an effective return process. According to researches, around 71% of customers are more likely to become loyal ones if they are satisfied with their return process and how it was handled.
Like any other process, any step of this one does carry risks and chances to derail an entire customer order. Avoiding any delay, optimizing the time of the day that merchandise is transported, the length of time that the inventory is held for, and the order dispatch process are all points that can have huge impacts on the operation. Without an optimized SCM process in place, the chain can fall apart from the very beginning.
Supply Chain analysis
There exists a difference between the supply chain and the classical logistics chain. The first one integrates the flows between the different stakeholders, from the extraction of raw materials to the delivery to the final consumers. On the other hand, the Logistics chain consists only of warehouse management, stocks and transportation. A Supply Chain thus brings together all the partners at the service of the final consumer.
The essence of Big Data nowadays is crystal clear, and it is becoming more and more necessary in several sectors, even in the Supply Chain. Among the future probabilities of this solution, its complementarity with the Supply Chain continues without doubt as one of the most assuring options.
First, Big Data and the supply chain use similar tools, a small sensor that can communicate with smartphones and tablets within a certain scope of action. Big Data would permit the supply chain to acquire more profitability due to the optimization of the shipping time. In the technology of Road traffic, weather hazards, or even routes, Big Data can pinpoint company data in real time.
It even plays an important role in the warehouse management to optimize the products storage and anticipate the replenishment of those who are out of stock.
It is important to analyse the well functioning of the activity because diagnosing a logistics channel allows you to identify the production problems and find the solutions. This can only happen through a specialized management software that optimizes the production and delivery processes and exchanges between each actor in the manufacturing chain that are facilitated.
There are two main Supply Chain tools among the available software programs:
- Warehouse management system (WMS) These programs make it easier to link the processes in order to optimize the reception, the well storages, the preparation of orders and finally the delivery.
- Transportation Management Systems (TMS) These programs facilitate the optimization of the transportation of the merchandises. It allows you to plan the Logistics channel and automate the big deliveries while follows the transport flow.
Acquiring the best strategy can only happen when we’re using the programs jointly. Thanks to the existence of Business Intelligence (BI) These programs have been offering the best visibility, lower supply chain costs, along with the selection of assets and carriers to achieve better performances rates.
The importance of logistics in a business
To ensure the sustainability of a business and grant the loyalty of its customers, we have to ensure that the clients are satisfied with the products and services offered to them. In order to grant this satisfaction, the companies have to always implement the most efficient logistic service.
The logistics can include:
- Informational flow
- The handling
- The packaging
- Stock management
Finding the right strategy can lead the business to acquire more benefits for its logistics management. This generates better quality, more speed and easier tasks. An effective usage of the logistics can bring numerous advantages for businesses.
Various methods appeared to facilitate the storage and supply processes, such as the Shared Supply Management. It consists mainly of a manner of delegating the management of supplies to the supplier, with more or less freedom.
The buyer offers data to the supplier, so he can take care of the replenishment. Surrogacy groups commonly two principal categories of inventory management:
- Vendor-managed inventory (VMI) It’s an inventory management practice where the supplier is the only manager of the supply (Quantity to offer, date of delivery, transport services management...etc).
- Co-managed inventory (CMI) consists of a business arrangement between the supplier and the customer, allowing the previous mentioned one to verify and validate the information linked to the order suggested by the supplier.
To sum up, the VMI consists of allowing the suppliers to take care of the stock levels of their products depending on the clients in a specific sale. It is possible to cope with major logistical challenges that lead to high VMI development.
Any distributor’s fear is to deal with a storage shortage that would generate an unwanted customer dissatisfaction and lost sales. The VMI here plays the hero role with its permanent data flow between different parties permitting a delivery cycle that avoids any sort of disruptions, based on the client’s consumption.
Managing the storage and inducing a reduction of costs can happen with an implementation of the VMI, which may be substantial (rental of a space for storage, employees for handling, insurance… etc). Therefore, we can see that thanks to the supply system, the stock is reduced to the strict minimum, or even non-existent.
Providing the manufacturer with all the needed data by the store represents one of the main issues considering its reliability. The central element of the VMI is the communication between partners, and that demands acquiring high-performance tools providing effective solution that would facilitate the dealing with any future challenges.
The main goal of the logistics is to always ensure the good quality of the products and services offered by the business to its clients, continuously improving satisfaction. If you are aiming to acquire a high notoriety and good reputation, it all lays in the hands of your clients and their satisfaction due to the word of mouth, or even via internet reviews.
Achieving an important economy either in the purchasing management, storage management or even the shipping management needs a good control of the logistics process because the logistics missions are numerous and bring out many benefits.
Optimize your Supply Chain
The best answer when it comes to optimizing your supply chain depends on a deep dive based on a company’s specific situation, including suppliers, production and clients. While there are some effective supply chain optimization techniques, you can be sure that there is no “one-size-fits-all” approach to optimizing your supply chain.
Analysing your strategic network permits you to look at a large range of metrics including physical facilities and inventories, costs for warehousing, transportation and labour, and distribution channels. The supply chain optimization initiative will typically use the company’s data to invent numerous scenarios to uncover the right solutions for creating and storing inventory within the supply chain to minimize the operation charges.
One of the goals of the optimization process is to recognize the most effective placement for inventory in the supply chain. This analysis includes balance charges for manufacturing, shipping and delivery. Your company may be able to decrease inventories due to better forecasting or just-in-time manufacturing inclinations.
A common starting point for the optimization process is looking at the reasons for creating and holding inventories under the current system. Perhaps your organization feels it needs a lot of safety stock due to inconsistent transportation or uncertain customer demand. The optimization analysis can lead your organization to develop a balance between frequently ordering small quantities or infrequently ordering large quantities. Ordering too often can lead to higher shipping costs, while ordering large quantities can result in high inventory costs. The supply chain is no longer a collection of cost centres that are an appendage to the company's core business. Today, the supply chain is a key source of strategic advantage. Cross-functional planning and communication are essential to ensure the strategy is understood and followed by all departments, backed to ownership of the supply chain at executive suite level.
Academic models are useful in framing and conducting the analysis. However, the process must also take into account the realities of fluctuating materials costs, labour, transportation costs and so on. A successful optimization process requires real-world experience to guide decisions, and a commitment to continue the process. Depending on the size of the organization, the optimization plan could be revisited annually, or for a larger organization, it's an ongoing, essentially real-time process. Keep in mind that customer requirements drive today's supply chain. As a result of the “Amazon Effect”, customers now expect shorter lead times and more responsive service, regardless of the industry. Optimal supply chain solutions aren't targeted at securing the lowest cost any more. Meeting customer expectations within reason is one of the main reasons for supply chain optimization.
The role of Third-Party Logistics in the Supply Chain
As we previously said, the supply chain does cover the entirety of the operation. Everything from producing right down to the last-mile distribution falls well within the area of supply chain management.
Needless to say, the achievement of these procedures are always being developed upon and new ways of working performed. And a well-rounded third party logistics company knows how to adapt to these changes swiftly and efficiently.
The 3PL company seeks the most favourable rates, most reliable shippers, and gets all the paperwork started. Once the merchandises are ready for freight, the 3PL picks up the global order, registers the carrier, and transports the cargo to the nearest port. Finally, they make sure that it clears customs as it travels across borders to be received by your customer on the other side.
Finding a solid 3PL backed by an equally reliable network is a great way to prevent this from happening. Generally, third party logistics companies will ship your goods as FTL or FCL. This is good news for you because it means that your shipment is being transported by itself. The carrier does not have to make numerous stops, nor do they need to move your goods around to load or unload products from other shippers.
All in all, this method of transport saves time, money, and peace of mind.
One of the best resources to have available in the shipping industry is that of reporting tools.
It is through the use of reports that shippers ensure their customers are happy and there is no disruption in the flow of goods through the supply chain. It is equally important that shippers can monitor the 3PLs that they choose to with and represent their brand.
And to be fair, most third party logistics providers make these reports available to their clients regularly. Well, at least the more reputable 3PLs do.
These 3PL reports usually contain data regarding the speed of your deliveries, accuracy of inventory lists, and order accuracy. Some reports contain many other key data points that are useful in helping a supply chain improve and scale.
Focusing on significant things
Operating with a third party logistics provider gives merchants the time to focus on what is relevant; growing a business.
A 3PL is there to supervise all the heavy-weight logistics stuff for you. They will take care of making sure that those orders get picked, packed, and fulfilled. Inventory forecasting? Leave that up to them.
You have a business to run and tons of useful data flying at you from your 3PL and their efforts. To do anything useful with either of those things, you need time, and time is exactly what third party logistics provide you.
Take full advantage of that extra time and go build an even stronger supply chain!
Ensuring you have the right and effective supply chain management for your business is essential in order to achieve your main goal of gaining profits and keeping a good reputation. With the struggles of the global pandemic, this field was affected due to international lockdowns and travel restrictions. Freight companies did beat this issue through the development of their services and the technologies implementations.
FAQ | Managing the supply chain [The ultimate guide]
What are the Main Issues Transportation Faces During Warehousing?
The Warehousing process is not that easy as it might seem. It does contain some tracking and communication issues. Its safety is a major deciding factor for storing items and any delays are accounted for and the costs incurred are also very concerning.
What are the Safety Points to be Taken Care of during warehouse transportation?
Warehouse transportation is not the safest process out there. It comes with its own set of risks. One must always be careful enough to dodge them. -Sharp objects must be cleared off right away. -Any loose flooring or those that can cause tripping should be taken care of. -Spills should also be taken care of right away. -Fire exits should be functional. -Proper use of garbage cans should be encouraged. -Items should be placed in their designated spots. -Cords and wires must have a safe separate space away from the walking space
What are the SCM issues faced by companies now?
-Companies now fail to take into account many crucial factors like: -Rising costs throughout the supply chain. -Consumer demands for improved delivery speed and customer satisfaction. -Volatile risks in the supply chain such as market fluctuations, trade disputes, etc. -The complexities of risk and cost management.
Which technologies enable a resilient supply chain?
With method intelligence technologies, organizations can discover, examine blind spots and remediate supply chain inefficiencies. There are 4 must-have elements to study while adopting technologies that will aid businesses to enhance effectiveness and achieve end-to-end method visibility and resilience.
DocShipper info: Do you like our article today? For your business interest, you may like the following useful articles :
- Top 8 Supply Chain Technological Trends in 2021
- How does Coronavirus impact international supply chain?
- 4 Supply Chain and Logistics Technology Trends in 2021
- Top 6 Reasons Why You Need 3PL Dynamics For Third Party Logistics
- Shipping Methods & Order Fulfillment: Everything You Need to Know
- Top 12 Logistics Industry Trends and Innovations in 2021
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