How Businesses Can Achieve Supply Chain Optimisation in 2024
How Businesses Can Achieve Supply Chain Optimisation in 2024
COVID-19 and recent geo-political events have shown how fragile supply chains can be to disruptions, often resulting in costly delays and lower customer satisfaction. Recent issues in the red seat and the impact on goods arriving from the East have led to fresh calls for businesses to prioritise supply chain reform during 2024.
Supply chain optimisation is crucial in today’s fast-paced business environment, particularly in competitive segments. Implementing an optimisation strategy isn’t just about ensuring continued service, it’s the best way for companies to maximise their profits and enhance efficiency. Senior executives can deliver supply chain optimisation designed to reduce operational costs and future-proof the organisation.
At Exec Capital, supply chain optimisation is one of the most common reasons why companies of every size are recruiting part-time and fractional executives. Our talent pool of C-suite and senior executives has a wealth of experience in supply chain management, allowing your company to achieve its long-term goals and unlock new opportunities through profit maximisation.
What is Supply Chain Optimisation?
Supply chain optimisation is essential to ensure that a company delivers a high-quality customer experience without disruption to distribution or delivery. Having a successful and well-performing supply chain ensures responsiveness and efficiency, maximising the company’s profit and improving customer retention.
Supply chain optimisation should identify ways to make the supply chain more sustainable while ensuring the company remains profitable. In many cases, supply chain optimisation will also focus on reducing operational costs.
Executives will utilise technology and digital resources, including artificial intelligence, blockchain, and the Internet of Things (IoT) to optimise supply chain networks and maximise performance.
Supply chain optimisation typically focuses on three stages:
- Supply chain design
The design of the supply chain is crucial to ensuring maximum performance. Executives will consider aspects such as the location of warehouse facilities and the movement of products between locations. Optimisation will also evaluate strategic decision-making, including planning manufacturing operations and forecasting demand to ensure adequate supplies are in place.
- Supply chain planning
Executives will establish a supply chain deployment plan as part of their optimisation strategy, including inventory planning and asset coordination to optimise delivery. This deployment plan should gather information from customers and suppliers to ensure the supply chain maintains a balance of supply and demand. Such supply chain planning is crucial for organisations that operate with a just-in-time (JIT) inventory system.
- Supply chain execution
Executives will focus on execution-oriented strategies that prioritise systems and applications. These processes can be overhauled or established by a senior executive and include everything from transport management to inventory management and global trade management. Execution optimisation should also include applications that support real-time decision-making and order management.
How Companies Can Optimise Their Supply Chains
SMEs and companies experiencing turbulent growth are choosing to turn to senior executives to help optimise their supply chains. These specialist executives can choose from a range of strategies and management systems to optimise the supply chain. Executives will curate a strategy that considers the company’s specific supply chain circumstances and any problem areas.
- Streamlining supply chain operations
The first step to supply chain optimisation is ensuring all operations are streamlined. Executives will start by clarifying the supply chain process, from the very first step of sourcing materials to delivering the product to its final destination or customer.
Mapping out the supply chain process makes it easier to identify potential bottlenecks and areas where optimisation is necessary. Investing in supply chain management software and automation are the most cost-effective ways to streamline operations and maximise supply chain delivery.
- Introducing inventory management and demand forecasting
Companies must accurately forecast demand to ensure that their supply chain finds the correct balance between supply and demand. Inventory management systems, market insights, and data analytics result in more accurate demand forecasting, allowing companies to adjust their inventory to adequately meet demand without overstocking.
When overstocking occurs, the company has capital unnecessarily tied up in inventory. Management systems and demand forecasting will identify the best balance between overstocking and understocking to ensure that the company meets demand while still optimising its working capital.
- Relationship management
Supply chain optimisation isn’t just about utilising data – it’s about developing and maintaining supplier relationships. Having a collaborative partnership is crucial to unlocking benefits that can help optimise the supply chain.
Companies with good relationships with their suppliers can utilise better credit terms, access to highly sought-after materials, and discounted rates. Maintaining open communication with suppliers can help identify potential supply chain issues early and find mutually beneficial solutions. Companies that prioritise relationship management have more resilient and cost-effective supply chains.
- Outsourcing business activities
Deloitte’s 2021 ‘Global Outsourcing Survey’ found that 88% of companies achieved their cost reduction objectives by utilising outsourcing. Choosing to outsource business activities can streamline processes and improve management results. Customer services, procurement, and logistics are amongst the most common activities outsourced to third parties. At Exec Capital, our portfolio of executives is available for you to outsource work to on a part-time or fractional basis.
- Utilising technology to streamline processes
Supply chains can be complex, but technological evolutions mean that automation can streamline almost every aspect of the process. Automated processes can deliver data-driven insights and provide the opportunity to identify new ways to ensure risk management and maximise efficiency. 50% of supply chain companies are expected to invest in AI technology in 2024 to enhance analytical capabilities and improve processes.
- Distribution and transportation efficiency
Supply chain optimisation relies on efficient distribution and transportation. These two aspects are crucial to any supply chain. Executives may choose to explore different transportation options and providers, as well as having alternative options available in the event of supply chain issues.
The company should choose a distribution and transportation option that minimises fuel consumption, reduces transit time, and operates on an optimised route. Technology can play a role in this optimisation with real-time tracking to provide extra visibility of these crucial steps of the supply chain process.
- Analytical tools
Companies that understand their customer demands are uniquely positioned to give their supply chain a competitive edge. Analytical tools are essential for forecasting, including identifying potential trends and delivering high-quality customer service. This real-time data should deliver better decision-making.
- Implementing KPIs for continuous improvement
Supply chain optimisation isn’t a one-time operation. Executives should implement and monitor KPIs to ensure continuous improvement, adapting the supply chain process according to the data gathered by these KPIs.
Continuously monitoring and analysing performance is crucial to being able to pivot and adapt to supply chain disruptions. Continued optimisation should include feedback loops and regular audits.
What Software Solutions are Necessary for Supply Chain Optimisation?
Senior executives are increasingly turning to software solutions as a way of investing in supply chain optimisation. These software solutions help maximise performance and ensure continual monitoring of individual components of the system. There are a variety of software solutions that executives can choose from:
1. B2B Integration Platforms
These B2B platforms help automate critical processes with digital integration, visibility, and seamless collaboration between companies and their supply chain partners. Implementing these platforms creates more time-efficient processes.
2. Embedded Applications
Applications can be implanted into specific aspects of the supply chain process for individual optimisation and streamlining. These applications can help with labour-intensive activities, such as product management, supplier relations, and invoice processing.
3. Supply Chain Analytics Platform
Analytic platforms enable executives to zone in on individual aspects of the supply chain process with extra visibility, providing them with actionable insights and real-time data. These platforms can be implemented to support crucial aspects of the supply chain process and ensure its adaptability.
4. Supply Chain Optimisation Platforms
These platforms leverage artificial intelligence and data analytics to help model potential supply chain reforms. They can be utilised to optimise individual steps of the supply chain process, from manufacturing to financial management and distribution.
Why is Supply Chain Optimisation Important?
Supply chain optimisation is crucial to enabling companies to meet their short and long-term goals, including maximising capital and ensuring efficiency. Supply chains are complex and impact virtually every aspect of a business.
1. Data insights
Supply chain optimisation delivers greater visibility with real-time data, ensuring end-to-end efficiency. Companies that invest in optimisation and technological solutions are better able to meet customer demand and expectations. These data insights and visibility can help executives monitor KPIs throughout the company.
2. Competitive edge
Optimised supply chains that continue to evolve have a competitive edge over the rest of their industry. It’s crucial for building a brand’s reputation and maintaining its public image while supporting real-time decision-making. Optimised supply chains are more agile and adaptable, being able to respond to disruption and new competition faster than their peers.
3. Cost reductions
Companies invest in supply chain optimisation to reduce their operating costs and eliminate financial inefficiencies. Automation, inventory management, and optimised delivery options maximise capital efficiency and free up resources to be used elsewhere in the business.
Customers are increasingly making purchasing decisions based on a company’s sustainability levels. Optimising supply chains presents an opportunity to minimise the company’s carbon footprint and implement sustainable and ethical practices, such as using delivery services that operate with renewable energy.
5. Increased revenue
Optimised supply chains allow companies to be more proactive, responding to customer behaviour and achieving higher levels of customer retention. Ensuring accurate and on-time deliveries increases a company’s revenue. Continued monitoring of supply chain processes can identify more affordable alternatives and optimised routes for faster deliveries.
6. Better collaboration
Supply chains are only successful when there is collaboration between the company and its stakeholders, including suppliers and vendors. Executives should consider the ecosystem around their supply chain, spotlighting individual steps to develop data visibility to ensure better decision-making. Collaborative relationships can help mitigate risks and give companies access to better terms for their supply contracts.
7. Enhanced performance
Supply chain optimisation enables companies to implement KPIs that help assess the performance of their suppliers and individual components within the supply chain. Optimisation strategies foster an environment for continual improvement and performance monitoring, helping to further drive efficiency throughout the supply chain.
8. Integrated management
The goal is to integrate systems to create a streamlined process where all operations can be monitored, tracked, and assessed internally across one or more platforms. Having integrated management enables end-to-end visibility for better transparency to create and deliver more cost and time-efficient outcomes.
How to Implement Supply Chain Optimisation
Every executive will take their own approach to overseeing supply chain optimisation, tailoring their measures to meet the specific needs of their company. While there isn’t a ‘one size fits all’ strategy, there are five things every executive should consider when implementing supply chain optimisation.
- Go global, stay local
It’s easy to get distracted by the global picture, especially for international supply chains. Executives should consider the company’s local infrastructure and how these assets can be optimised, including technological investments.
- Outsourcing non-essential tasks
Outsourcing is a crucial component in supply chain optimisation as it can free up the time of internal employees to create a more efficient and value-driven supply chain. Customer service, procumbent, and inventory management are just some areas that can be outsourced.
The purpose of supply chain optimisation is to create a more responsive operation that can adapt to changes in the industry and the economy as a whole. Responsive operations are more efficient and agile, and better prepared to deal with unexpected hiccups and changing customer behaviour.
- Utilising cloud-based technology
Cloud-based technology is crucial to optimising supply chains and preparing them for the future. This technological investment offers real-time insight and information to enhance customer satisfaction and deliver more cost-efficient outcomes.
- More collaboration
The key to achieving an optimised supply chain is through collaborating with suppliers, manufacturers, and stakeholders. Nurturing these relationships can deliver higher fulfilment rates, increased profitability, and better inventory management
Recruit a Supply Chain Specialist with Exec Capital
Supply chain optimisation is crucial for today’s businesses as real-world events continue to have a knock-on effect on operations. Companies that are more adaptable and agile have a competitive edge with increased profitability.
At Exec Capital, our talent pool of executives includes supply chain specialists who are available to work on a full-time, part-time, and fractional basis. Contact our team to start the process of recruiting a supply chain executive today.