Supply chain surplus, also known as supply chain profitability, is a common term that relates to the added value created in different areas of an organisation’s supply chain.
The greater the supply chain surplus, the more successful the supply chain. To increase supply chain surplus, there are several strategies organisations should incorporate into their operation. These include:
- Audit your supply chain.
- Optimise different areas of your supply chain.
- Embrace more automated solutions.
- Evaluate your suppliers.
Audit your supply chain.
A supply chain forms the backbone of every successful organisation. It needs to be efficient, cost-effective and stay close to the competition.
For this to happen, a supply chain should never stand still. Instead, different elements should be regularly optimised to ensure it performs to the maximum.
However, before this can be done, it is vital you run an audit of your supply chain to establish what is working and what needs improving.
This is key to achieving a supply chain surplus. There are several questions you should ask yourself when running your audit. These include:
- Is our supply chain resilient? Do we have backup plans in place for critical vendors?
- Does our procurement process consider location as a factor when choosing suppliers?
- Do we have a process in place that tracks delivery timeliness and commitments?
- Are we running quality checks on goods and materials received from suppliers?
- How are we reporting on quality issues?
- Are we tracking errors and breakages?
To run a successful audit, you need data by your side. This will allow you to measure the performance of different areas of your supply chain.
For example, you might decide to analyse your truck fleet to establish how much they’re contributing to your businesses profitability.
With I_Site fleet management, all of this is possible. Discover how to reach a new level of productivity and maximise supply surplus with this powerful tool here.
For more insight into conducting a supply chain audit and how to best prepare yourself before doing one, download a copy of our supply chain profitability playbook.
Optimise different areas of your supply chain.
Once you have successfully run your supply chain audit, you can then optimise various areas of your supply chain. To achieve supply chain surplus, you should focus on operating costs and ways to reduce these.
There are five primary drivers of supply chain costs, including investment, transportation, procurement, production and inventory costs. Solutions are available to help you reduce these costs, including automation, which we discuss in more detail in the next section.
Data is your most valuable resource for optimising your supply chain because it provides a single source to aid decision making. Therefore, you should invest in a Warehouse Management System (WMS) that can track information and present analytics on a dashboard.
Embrace more automated solutions.
When it comes to the supply chain, automation involves adopting digital technology to improve efficiencies, connect applications and streamline processes. Although many areas of an organisation benefit from automation, one of the most obvious is your warehouses.
Warehouse operations include repetitive tasks such as inventory management, supply chain tracking and operating heavy equipment. Automating these tasks can enable companies to achieve better productivity, worker safety, sustainability and cost-efficiency.
Some examples of warehouse automation your organisation could benefit from include:
Automated Guided Vehicles (AGVs).
By introducing AGVs to an operation, warehouses will reduce errors and breakages across the supply chain. Ultimately, this will drive down costs and prevent the loss of time and productivity, which can negatively impact a business' bottom line.
Supply planning & inventory automation.
There are also automated solutions that can help you manage your inventory better to reduce costs and make use of working capital. Find out more about the power of automation and the benefits it can offer by downloading our insightful resource.
Evaluate your suppliers.
Another step you can take to improve and maximise supply chain surplus is to evaluate your supplier relationships.
These relationships are vital in ensuring your supply chain operation runs as efficiently as possible. Therefore, there are certain factors you should consider:
Communication is crucial when building strong relationships with your suppliers. Without good communication, the relationship is doomed to fail. How receptive are your suppliers? Do they answer your emails in an appropriate amount of time?
Good suppliers are responsive, and if yours are not, you should consider moving on and working with someone different.
You need to work with suppliers you can trust to do a good job. If a supplier regularly falls short on your purchase orders or delivers delayed shipments, it will impact on your supply chain profitability.
A quick way to improve your supply chain would be to cut ties with suppliers who have regularly let you down and been unreliable on numerous occasions.
To maximise your supply chain, you should consider how fast your suppliers can action and ship your orders once they are completed. Delayed orders mean goods get to your customers later. This can impact your reputation and make customers want to purchase from you again.
These are just a few examples of strategies and tactics you can implement to maximise supply chain surplus. We have collated more guidance and valuable insight by downloading our supply chain profitability playbook.
Your path to building a profitable supply chain starts here.
Effective supply chain management has a key role in making your organisation more profitable. But how do you make that happen?
Look no further. We have created a supply chain profitability playbook that delves into the most effective strategies you can embrace to see your profit margins go in one direction. The right one.
Access your copy for life below.