Logistical problems impact on a company's development and growth. They jeopardize customer satisfaction and therefore a brand's reputation. To prevent this type of risk, good supply chain management is essential. It's not just a question of controlling the flow of goods. It's a global and complex issue that must integrate a range of heterogeneous variables. Here's why and how to optimize your supply chain.
Why optimize the supply chain? 3 benefits for the company
1. Gain visibility over a product's entire logistics process
The supply chain is a complex process. It integrates different types of logistics flows and players. The aim of supply chain optimization is to master this complex whole. This means focusing on a specific element to solve a given problem, while analyzing the impact on the rest of the chain.
2. Anticipate risks and market trends
Anticipating demand is fundamental to good supply and inventory management. It translates into the right order quantities. The aim is to meet customers' needs, while avoiding generating additional costs through overproduction or overstocking.
Optimizing the supply chain also reduces the various types of risk that could disrupt or compromise it. By improving your service rate, it enables you to control logistics expenses by reducing transport costs, unforeseen costs, stock-outs, etc.
3. Maximize customer satisfaction
On-time delivery and impeccable service are two essential elements of customer satisfaction. On an e-commerce site, a buyer who is dissatisfied because of a logistical problem will not return to the platform. It can even lead to bad publicity.
Optimizing the supply chain is therefore a question of reputation and brand image. In a highly competitive environment, you need to do everything you can to satisfy your customers.
How to optimize your supply chain? 6 key points to master
Convinced of the need to optimize your supply chain? Here are 6 tips to implement in your logistics management process.
1. Integrate the supply chain into the company's global vision
Supply chain management must serve the company's overall objectives, in the short, medium and long term. Adopting a standard supply chain model modelled on another organization's way of operating is a big mistake.
It's vital to adapt the logistics process to your company's specific needs. This means, for example, recruiting a supply chain manager. This specialist works in collaboration with management, the company's various departments and the logistics team. Their aim is to bring coherence to supply chain management.
2. Structure your supply chain process
Mapping the supply process helps to identify the interdependencies between the links in the logistics chain. It also means allocating the necessary resources to each component. That's why it's important to take into account every stage of the process. In this way, the company establishes an effective strategy based on reality. It anticipates risks by identifying blocking points.
Good to know: supply chain management rests on 4 essential pillars:
- Human, technical, material and financial resources.
- Logistics cost structure.
- Logistics conditions (lead times, shipping methods, etc.).
- The service rate, which reflects the quality of execution and the number of damages.
3. Listen to your target audience
Supply chain quality impacts a company's brand image. Customer satisfaction must be at the heart of your supply chain strategy. It must be based on consumer needs and your brand values.
Let's take the example of a target audience who wants delivery as quickly as possible. To win them over and overtake your competitors, you need to shorten your delivery times. If customers prefer to be delivered a little later, but at a lower price, offer free delivery. It also happens that customers attach greater importance to ecological values. In this case, you need to work on a green supply chain. In this case, opt for eco-responsible modes of transport and communicate on this.
4. Improve supplier relations
The success of a supply chain depends on effective collaboration between all the players involved. Suppliers are the first link in the supply chain. They play a fundamental role. Indeed, the slightest blockage at this level has an impact on the rest of the process.
Building a partnership with suppliers is a good way to manage procurement. Mutual trust is created with the aim of establishing good communication. This improves risk anticipation. In the event of a problem, you can react quickly. What's more, you can more easily negotiate prices with a partner.
Furthermore, supplier sourcing must guarantee their reliability and financial health from the outset. The choice of partners cannot be left to chance. You also need to diversify your sources of supply, in case one of your suppliers runs out of stock.
5. Define and analyze performance indicators
Logistics KPIs are used, among other things, to :
- Take stock of your logistics activities;
- track the evolution of your supply chain;
- evaluate the effectiveness of the improvement actions you implement;
- Analyze your market positioning in comparison with your competitors;
- anticipating and preventing risks ;
- adjust your strategy.
Fill rate, stock rotation, service rate, etc. Performance indicators are numerous. They provide you with a coherent dashboard for monitoring your roadmap.
Beware! Many companies think they're doing the right thing by calculating a whole range of KPIs. This is the best way to confuse yourself and spoil your analysis. Choose only those metrics that correspond to your objectives and the specificities of your supply chain.
6. Automate logistics flow management
There are three types of logistics flows:
- physical flows ;
- IT flows ;
- financial flows.
This represents an incalculable amount of data and variables to process. Excel-type tracking files are no longer sufficient. For efficient supply chain management, automation is essential. It is based on a range of specific software solutions. The aim of these solutions is to streamline logistics processes. Here are just a few examples.
ERP (Enterprise Resources Planning)
This software centralizes the management of all company operations. It's a unified information system for all departments (accounting, inventory management, sales, etc.).
WMS (Warehouse Management Systems)
The WMS optimizes warehouse management by integrating all human, material and information resources. It maximizes the availability of storage space, reduces order-picking time, and ensures compliance with health and safety regulations, etc.
APS (Advenced Planning System)
This solution is dedicated to the forecasting function. APS tracks sales and market trends. It anticipates demand with the aim of improving the company's visibility and managing its inventories and production as effectively as possible. It draws up plans designed to be as close as possible to reality.
The TMS (Transport Management System)
The TMS specializes in optimizing the transport of goods. It enables you to better manage your vehicle fleet, maximize space utilization and reduce logistics costs. It can also be used to organize carriers' itineraries to reduce delivery times.
There are software solutions that combine all these functionalities. With the advent of new technologies such as artificial intelligence or blockchain, logisticians can control the supply chain from end to end. They can also draw on tangible data to make informed decisions.
Managing your supply chain: 3 points to remember
- Optimizing the supply chain helps improve logistics performance and customer satisfaction.
- Supply chain strategy is based on taking all the components of the supply chain into account.
- Anticipation and automation are two fundamental elements in mastering your supply chain.
Got a supply chain question? Get in touch with your dedicated contact! D&figroupe puts all its logistical, human and technical resources at your disposal. Our experienced customer service team will work with you step by step to optimize your end-to-end supply chain management.
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