Fulfillment Operations 5 min read
September 22, 2021 by Rashi Sood - 5 min read
- What is Supply Chain Optimization?
- Challenges in Supply Chain Management
- Importance of Supply Chain Optimization
- Supply Chain Management Strategies
Supply chain optimization has become a hot topic among eCommerce sellers recently. It means operating the supply chain at the highest efficiency with the lowest possible cost. The total operating expenses and gross margin return on the inventory are the key performance indicators here. The aim is to deliver products at the lowest cost while ensuring the highest profits.
To meet the goals, there is a need to balance the manufacturing cost, inventory, transportation, and other fulfillment-related services. If done right, the optimized supply chain can bring a competitive advantage for the business. Supply chain optimization increases efficiency and reduces costs, aiding in the overall development of the business.
This blog will take you through what supply chain optimization is and the best strategies to improve your supply chain management.
What is Supply Chain Optimization?
Supply chain optimization is the process of optimizing the supply chain process for maximum benefits. This means minimizing operational costs while also maintaining optimal inventory management. It includes the following:
- Manufacturing and transportation costs
- Distribution costs
- Fulfillment costs
The optimal supply chain process helps deliver products at the lowest cost and increase profit while also ensuring the highest customer satisfaction.
Challenges in Supply Chain Management
Being up to date with the supply chain strategies is the need of the hour. However, the first step towards it is knowing the problem areas:
Efficient and speedier supply chains lead to cost-effective operations. The best way is to look for problematic areas and eliminate all bottlenecks. You must try to rule out all possible delays to not let any additional cost add up.
The market is growing at a reasonable rate, and the channels are also increasing. So, how can you optimize your functions to save costs without compromising on the customer experience? Well, you can store inventory in multiple warehouses closest to your buyers. On the one hand, you can save on shipping costs, while on the other, you can ensure the delivery of your products within a day or two.
Inventory Demand Forecasting
Meeting demands by timely restocking inventory is the factor that puts maximum pressure on the supply chain. You can restock inventory well in time by anticipating demand and ensuring that your customers never go away empty-handed.
With the eCommerce giant Amazon, the customer expectation is an all-time high. They want faster and timely delivery and responsive services. This lights on the importance of technology for efficient operations, decreased fulfillment cost, and increased customer satisfaction.
Importance of Supply Chain Optimization
An optimized supply chain helps in adapting the current logistics trends with ease without incurring high costs. Here is how optimizing the supply chain can be beneficial for your business:
- It helps in increased inventory management which leads to cutting costs and ensuring timely restocking. This helps avoid out-of-stock scenarios, and you can meet the demands of all your customers without having them wait. Besides, while storing excess inventory, you can incur high storing charges and higher shipping costs.
- Streamlined fulfillment operations mean timely and faster delivery of products, leading to optimal customer satisfaction. By identifying more rapid means of transportation and delivery, you can optimize delivery methods and improve overall fulfillment operations. This also means fewer returns and lowered costs associated with customer service.
- When you have visibility of the functions and overall cost, you can choose the best path forward. This helps in operational efficiencies and cost-saving.
Supply Chain Management Strategies
Monitor your inventory from time to time to keep a tab on the available raw material and inventory at different storing locations. You can always take the help of inventory management software to stay updated on what you have and how long it will sustain. Periodic assessment is also a way to have accurate logging of inventory and achieve higher efficiency.
Standardizing the process is of crucial importance to optimize the supply chain process. You can install software to streamline the process to save time, effort, and cost. This will surely improve overall productivity, aid in better communication, decrease labor-related costs.
Transparency in Operations
Informed and well-thought decision-making requires data that is accurate and reliable. You can take the help of automated reports to keep your supply chain strategies up to date. The increased transparency in operations leads to decreased operational risks and boosts the overall business bottom line.
You can ensure product distribution by keeping end-to-end visibility into the distribution network. A distribution strategy will ensure optimal utilization of the assets and the entire distribution process. This enhances the customer experience by facilitating faster delivery and reduced wastage of stock. Your distribution network and strategy must be aligned with business goals to stay on top of the process.
Adopting these strategies is the best way to ensure a smooth supply chain process. By implementing them, you can save on time, effort, and cost.