In the future, supply chains will no longer be as long and stable as they were in the past. This is why it will be essential to keep them under constant control with a focus on both stability and agility, so as to react to sudden and unexpected changes.
Companies will need to be able to simulate a wide range of scenarios and to analyze and understand their outcomes.
It is also necessary to gain a clear understanding of one’s own supply chain and to constantly adapt processes in order to make the most of new technologies (in terms of automation, robotics, artificial intelligence and data analysis), of changing cost structures, of evolving consumer preferences and of new social, economic and environmental risks.
As a starting point, it is certainly important to have an integrated, advanced and scalable WMS (Warehouse Management System) in place, but it is also necessary to rethink the structure of the supply chain in order to reduce management costs across the entire supply chain, ideally from strategic analysis right through to execution, if the aim is to achieve and sustain improvement opportunities along the whole supply chain.
Strategies and tools for supply chain costs
It is essential to be able to support customers throughout the entire supply chain improvement journey, from strategic analysis to execution, from identifying specific opportunities to delivering and monitoring the resulting benefits, all the way to advisory support and ongoing managed services.
It is also important to make use of a range of tools and technology, including a supply chain diagnostic system, logistics and inventory visualization solutions, as well as a broad suite of integrated tools. Experience has shown that a strategic overhaul of the supply chain can deliver outstanding results. Economic benefits could also come from an organizational review of production or commercial activities, following the outsourcing trend of recent years.
The procurement and supply chain ecosystem has indeed become highly efficient over the past 20 years, but at the cost of growing complexity and potentially reduced agility, which could turn out to be a disadvantage. For example:
- Supply chain layering has increased, at the expense of transparency
- Just in time management has become increasingly widespread, minimizing the margin for error
- Sales and operations planning (S&OP) has become more accurate, limiting the ability to manage unforeseen events
- Warehouse management, in turn, has become more integrated
Keeping supply chain costs under control in 3 steps
In other words, companies must be ready to invest time and energy in critically reassessing their supply chains, placing the emphasis on resilience and agility. Upstream of this, however, there must be a coordinated effort to get the entire supply chain moving again.
This reorganization must permeate the whole company, and every function must have a clear understanding of how its role relates to that of the others. There are at least three steps to follow in order to keep supply chain costs under control.
- Sales teams must work more closely than ever with customers to forecast demand and obtain precise commitments on what will be purchased and in what quantities, subsequently passing this information on to the procurement function.
- Procurement must reassess its supplier base to get the best out of it, not only in terms of cost and cash flow but also in terms of stability, reliability and innovation, always fostering a partnership based relationship.
- The supply chain function will need to rework, as mentioned above, detailed models for the warehouse, delivery times, routes and many other parameters.
