Every business wants an efficient supply chain that improves profitability and ensures operations keep running. However, developing a supply management strategy is challenging for many businesses. Many of the problems that arise in a supply chain are due to poor communication, lack of demand, and inventory management, as well as a failure to make useful forecasts and predictions. To ensure efficiency and profitability, as well as stay ahead of the competition, businesses must come up with an intelligent supply chain management system that ensures everything is running as it ought to.
Demand management, in many ways, is the basis on which intelligent supply chain management is based. It includes understanding and anticipating the needs of a business’ target demographic. By understanding this demand, a business can then manufacture or order the products they need, in the quantities they need and at the right time to avoid low inventory levels.
Inventory optimization is where businesses manage their stock levels, maintaining adequate stock levels to meet immediate and future demand while also ensuring working capital is not held up in inventory. Inventory control is made a lot more challenging by the fact that demand forecasting is quite difficult and deficiencies in forecasting lead to stock-outs. These directly lead to interruptions along the whole supply chain, lower or lost revenue, and loss of important customers.
An intelligent supply chain management system must be able to balance inventory and capital, in many cases favoring a larger inventory because the consequences of having no stock are worse than having capital tied to the stock.
Supply chain inventory optimization uses algorithms and computer programs to analyze stock levels and determine the levels of stock that are enough to keep up with demand while optimization for the use of available capital. Organizations that want better inventory and supply chain management can hire supply chain inventory optimization experts like Supply Velocity to help streamline, optimize, and improve their supply chains.
Proper communication is not just about sending and receiving information. Supply chain managers and business owners must understand that poor communication makes things more complicated than they are supposed to be which slows down the whole supply chain.
Good communication management practices ensure the right information reaches its intended recipients without causing delays in any part of the supply chain.
Good communication gives a company enough flexibility to be prepared for any unwanted outcomes, changes in the supply chain, or market needs and demands.
One of the best examples of good communication is the supplier-feedback loop. This loop helps businesses see if there is going to be any problems in the supply chain before they happen, helps uncover any challenges the supply chain might be having, and helps businesses identify new areas of improvement and growth.
No one can dispute the importance of data in supply chain management. In fact, data should be at the center of all business decisions. Predictive analytics eliminates slow fulfillment times that used to be due to poor predictive decisions. Now, businesses can use predictive analytics to predict fulfillment using historical data and projects of market growth or changes in demand.
Partner integration gives businesses lots of advantages. It makes it easier for them to visualize the whole supply chain, communicate better, and accurately predict lead and fulfillment times. Additionally, it helps businesses bring their products to the market much faster which can reduce the final cost to customers.
Even where businesses have different closed systems, open internet protocols make partner integration possible. Other tools being used to make this possible include various collaborative tools and single-information networks.
Use of Leverage
Companies that have robust supply chain management systems are more likely to experience rapid growth. This growth puts them at an advantage because they get into a position where they can use their leverage to increase revenue and profitability. The savings made can be used to grow the company by eliminating the competition by offering competitive pricing. Businesses are advised to re-evaluate their leverage periodically to ensure it continues to work in their favor.
Safety Stock Management
In addition to managing the overall inventory, a smart supply chain management system must also give business owners tools to manage their safety stock levels. Safety stock is used to provide a buffer to prevent backorders and stockouts in cases where the forecast leads to orders of too many or too few products.
Supply chain management is already complicated enough, However, businesses cannot afford to slack in this one critical area because inventory is the reason why customers buy from a business and if it does not have inventory due to supply chain issues, it might lose some of its customers.