Today we may have just hit the limit of optimising supply chains purely for the sake of cost. The reality we are seeing is that, instead of reducing such costs and other inefficiencies, we unintentionally sub-optimised our entire networks by just moving the cost elsewhere.
It is high time we moved past this and towards a bigger, more holistic perspective of supply chain optimisation that is not limited by the goals of generating short-term value.
For example, we have the combined goal of sustainability and profitability. After all, what good is a low-cost supply chain when it still does not lead to business growth and eventually exhaust both its money as well equipment and material resources?
Hence, we must rethink the way we approach the job of optimisation. It is not enough to just focus on getting the business to keep selling or producing the next day. In fact, being at that point only means you have long failed to optimise already.
On the bright side, making the shift towards proper supply chain optimisation will be an effective means to get you out of such dire straits and towards growing a business that will last.
Now, for this transformation to happen, you need to focus your optimisation initiatives on three areas.
1. Technology, Transparency and Trust
Supply chains under-deliver when there is lack of trust in the ability of members within the network. For example, shipment from one particular carrier may not have proper tracking systems in place, leading to a high chance of unexpected delays and an inability to fully trust in the service. (But hey, does that really matter? The carrier is cheap!)
Likewise, a lack of transparency can make it difficult to really verify if certain materials being introduced into the manufacturing process are really from sustainable sources. This same lack of visibility can also make it difficult to implement responsive changes to demand because demand is not being accurately tracked at point-of-sale or frontline retailers are struggling to submit their reports.
Fortunately, technologies like blockchain are paving the way to increasing the visibility of supply chain members and keeping everyone on the same page. And when that happens, trust and good faith can finally be built!
2. Human Experience in the Supply Chain
Now, while technology can grant a lot of visibility, it is by no means perfect. We rely on the data generated by our supply chain software tools to help us make decisions, but it is always best to complement that with the actual experience of being employees on the factory floor as well as being the customer ordering at your website.
Sometimes data doesn’t make quite as much sense until you finally see how things are on the ground. It can be said that it is the final check and balance against data misinterpretation or manipulation.
The human experience can also open the eyes of leadership to things that are not easily quantifiable, such as the impact of working conditions on mental health, or the influence of geography on product deliverability.
3. Commitment and Dedicated Communication
Optimisation isn’t also an overnight process. Even with the best tools, it requires the commitment to use them and collaborate with them while also staying in constant communication with other members of the supply chain network.
Commitment should also mean that leaders are willing to push through with change initiatives even when faced with disruption (and possibly even adapting the change to that disruption).
After all, even a first success isn’t always guaranteed unless it is studied and analysed to the point that future company leaders can replicate the same positive results.
All of these can be accomplished without disregarding costs. You can even go so far as to say that real information on the costs can be better found and managed this way. Instead of just moving unseen costs around while trying to reduce the numbers of just one part of the supply chain, we end up with an operation that is healthier and more sustainable.
(Image from Pixabay.)