Focus is important to keep things running smoothly. In the supply chain, knowing where to put your attention makes a big difference.
But what should you focus on, and how will it help you succeed?
Watch the full video to find out the key areas that need your attention and how they can benefit your business.
Looking to enhance your supply chain? Here’s what to focus on:
Analyzing Cost to Serve
The first step to improving your supply chain is conducting a thorough cost to serve analysis. This crucial process allows you to identify and address profit and cash leaks within your supply chain, which is especially important given today’s increasing cost pressures. By analyzing cost to serve, you can pinpoint areas where money is being lost and take corrective actions to improve your bottom line. If you haven’t undertaken this analysis yet, I strongly recommend checking out our 14-minute video that offers a detailed guide on how to perform cost to serve analysis. Many organizations are surprised to discover that a significant portion of their orders may actually be losing money, which highlights just how vital this analysis can be.
Reviewing Distribution Networks
Next, it’s essential to assess your distribution network. Over time, distribution networks can become outdated and no longer align with your current business needs. Take a close look at how products move through your network and how frequently they’re handled. Inefficient product flow is a common issue that can lead to unnecessary costs and delays. Additionally, review your stockholding locations to ensure they are strategically placed to meet your current demands. Adjusting your distribution network to better align with your business needs can lead to significant improvements in both cost and service levels.
Balancing Inventory Management
Finally, focus on achieving a balanced approach to inventory management. The pandemic has led many companies to increase their inventory levels, but this often results in imbalances, such as overstocking certain items while running out of others. Effective inventory management is key to ensuring that your stock is well-balanced across different categories and service levels. This not only helps to meet customer demand but also minimizes the costs associated with holding excess inventory or dealing with shortages. Even large organizations struggle with this, so it’s crucial to regularly review your inventory management practices to ensure they are effective.
Related articles on this topic have appeared throughout our website, check them out:
- Top 6 Supply Chain KPIs: Keep Your Dashboards Simple
- 3 Common Inventory Management ‘Sins’—And How to Avoid Them
- Cost to Serve at a Glance: 9 Steps to Success & 5 Mistakes to Avoid
- 10 Reasons to Review Your Distribution Network Design
Editor’s Note: The content of this post was originally published on Logistics Bureau’s website dated July 5, 2023, under the title “Top 3 Things Organization Should Focus On“.
