How to reduce cost through supply chain optimization?

Welcome back Dear Readers, This is Krishnakanth TS pursuing MBA in Marketing and Operations from Amrita School of Business. In this blog I'm taking you through how to reduce cost through supply chain optimization.

we need to follow different steps in order to reduce cost and improve performance

Step 1 Map out the supply chain

Before imitating, we must know what we have

We need to map out our supply chain and the crucial features of mapping are

-Reveal who our suppliers are

-Who is supplying our suppliers?

-Where are they located?

-How goods are being shipped

-Who are our customers?

This helps to identify weakness , risks and opportunities.

Step 2 Review the supply chain network design

Reviewing will hep to avoid duplication and also simplifies the structure. It increases the efficiency and lowers the cost.

- Clarifying the objectives and goals of supply chain

- Creating a team for supply chain review network

- Preparing a model for the supply chain network

- Using advanced analytics to know how the situation to be handled

Step 3 Supply chain modelling

It allows us to consider wider issues

Cost effective product mix, best supply chain network, optimal sourcing and production strategies , best plant and distribution locations will help to reduce overall cost and also to meet the demand

Step 4 Run optimization scenarios

Supply chain networks are complex and include factors like interdependencies, constraints, supply limitations, transportation, single and multiple sourcing strategies. It is difficult to determine the best supply chain network optimization decisions.

This weakness can be overcome by using optimization software for evaluating different supply chain networks.

Step 5 Enhance supply chain visibility

It means everyone in the organization should have better idea what effects the supply chain costs. Consider the enterprise wide software that has sales and marketing access to same supply chain information as the CSO .It helps the executives to make better decisions and allows the employees to track orders from source to cutomers. It also reduces errors and improve customer satisfaction

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