The speed and reliability of your distribution network is essential to your company’s success. But for most companies, logistics and transportation are, at best, a supporting line of business and, at worst, a distraction. For many businesses, their supply chain grew organically along with the growth of the business. When business growth forces rapid supply chain growth, there are almost always opportunities to decrease your overall spend and improve your logistics.
Every day, businesses use their supply chain as the differentiator for success. Amazon, Walmart, and other leading enterprises win by ensuring that their product is close to the customer, optimized for the best shipping time, and held in the correct quantity. But how can a smaller shipper achieve this level of supply chain excellence required to stand-out to the customer? To scale, an optimized distribution network is required to meet customer expectations and business growth targets.
It is essential to balance the cost of the distribution network with responsive customer service. A quick review of internal processes can eliminate touch points and wasted movement. Internal managers know where the supply chain bottleneck occurs and can develop alternatives and solve problems. But beware of the natural inclination to get lean by reducing inventory. Inventory must be managed in a careful way that reduces inventory holding cost while still enabling you to meet customer demand. The key is to align network costs with service level expectations while remaining customer-centric.
In many instances, supply chain and network optimization is where a company starts to look towards utilizing a third-party logistics company to streamline the majority of their supply chain functions. It’s crucial to eliminate any area of expense that doesn’t add value to your product or improve your customer experience—such as speed of delivery. You will find that efficiency equals savings, and an optimized distribution network equates to a cost reduction. An initial look at your distribution network starts with obtaining accurate data. Start with analytics on your last mile shipping data, inventory balances, product velocity, and being to develop out the trends that are occurring with your supply chain.
Investments can bring savings; invest in visibility tools to start better understanding the movement of your goods. These tools provide insight into supplier quality and manufacturing status and allow you to keep tabs on shipments in transit. It’s inexpensive compared to the savings potential, and can immediately reap a better customer experience. Accurate data points are critical if your goal is to maintain a competitive advantage, meet customer expectations and have a responsive and dynamic network. Data integrity is crucial; data driven decision making is tactical and analytical and must be based upon accurate input.
Supply chain experts or 3PL providers can find the most cost efficient ways to ship and distribute your product. Not every supplier considers efficiency first, but a true supply chain partner will. Have unnecessary redundancies been created in the distribution system? Is your inventory concentrated in the right locations? Is it close to your customer? Improved route planning and load balancing may be all your company needs. Maybe you need to consolidate shipments and pool distribution?
Improved supply chain performance creates stability, yet allows the supply chain to be responsive. Revenue growth, cost reduction, and improved customer satisfaction are a byproduct of network optimization. Evolution in the industry is a given, just as network optimization is fact of the future. Evaluating your supply chain and making improvements will give you a competitive advantage, but evaluations must be consistently repeated. Compare your supply chain to the best in class of your industry. You will find that businesses who deliver the best customer experience have the most optimized supply chain solutions.