Page 28 - Logistics News - May 2021

S UP P LY C H A IN

capabilities. A transformation programme should combine chain, companies can reduce costs while simultaneously
the data-driven analytics from the diagnostic phase with improving supply chain performance. Companies that
clear insight to the key drivers of fi nancial performance to develop coherent strategies and make data-driven decisions
develop a targeted change programme. to improve supply chain performance can, in doing so,
improve organisational profi tability.
Benchmarking using innovative analysis that sets
current performance against market competitors can form Th is is why eff ective supply chain optimisation is a
a strategic ‘call to action’ for a business. Aligning a data- crucially important aspect of operational performance.
driven review of how the supply chain is working, and its Design has a critical role in shaping product costs (and
potential, with the business strategy ensures the coherence supply chain management costs) as well as ensuring
of improvement actions; applying a ‘joined up approach’ to material and component costs are truly value aligned; value
a ‘joined up’ situation. being determined by the customer and their willingness to
recognise this in the price paid.
The role of the customer
Customer expectations have increased considerably, and Understanding your supply chain costs
they expect retailers to have stock of what they want, Th e process-related costs of planning, sourcing and logistics
when they want, or they will move onto competitors. operations are often overlooked. In many instances, simply
If customers order items online, they expect prompt, identifying and analysing these ‘indirect’ costs will reveal
on-time delivery and easy return processes for unwanted signifi cant opportunities for improvement. Understanding
purchases. Many manufacturers are dependent on just- total cost to serve allows your business to make the most
in-time manufacturing strategies that require delivery of informed decisions and seek cost reductions that are
components not only on time, but also not before time, and sustainable. Simply passing cost around the supply network
in exactly the required quantity. Good customer experience will not ultimately deliver savings and may hamper
is crucial as well as understanding what they value the most collaboration and limit the ability of a network to compete
and how they measure your business is key to any redesign with others.
of the supply chain operation as well as highlighting
opportunities and risks. Driving working capital effi ciency
Few aspects of a business will operate in isolation;
Th e ability to capture and apply information from delivering customer orders and getting paid certainly
across the supply chain network has been greatly enhanced do not. Assessing trends in the cash-to-cash cycle can
by technology. However, information, not just data, indicate issues in supply chain operations, and an in-depth
really fl ows when based on trust. Actions will not become review by channel, customer and supplier will bring the
synchronised across the supply network unless data is transparency needed to target improvements. Inventory
shared on a timely basis and transparency to levels several management is fundamentally dependent on cross-
steps forward and backword in the network is off ered. functional processes; decisions on core parameters and
Building collaborative relationships is fundamental and ways of working have strategic implications.
is more about mindset than technology and involves
identifying and sharing opportunities to create mutual Focusing the business for supply chain excellence
benefi ts and recognising that costs inevitably fl ow and Management KPIs and incentives need to be aligned to
circulate in the network. support coherent supply chain management. Th e quality of
customer relationships has an impact on the information
How to opti mise your businesses costs fl ow in the supply chain with more timely and accurate
L O GI S T I CS NEWS design and strategy. Even if someone does not work directly stock to meet customer requirements. Taking a systematic,
People are at the centre of any successful supply chain
demand plans requiring less inventory in the form of safety
structured approach to understanding how supply chain
in supply chain, there is a need for them to understand
that their commercial and fi nancial decisions will still
operations drive fi nancial results will allow your business
to manage trade-off s, identify opportunities and prioritise
impact supply chain. Th rough using advanced analytics
and by putting people and design at the core of the supply

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