The goal of anyone in supply chain is to establish the most efficient method to organise and distribute goods and services. Inefficient processes in warehousing and logistics are not only costly, but they also impact directly on your competitiveness and customer satisfaction. Difficulties can occur at every stage in the supply chain and are often highlighted when inventory levels are not optimum and promised delivery times are not being achieved.
What is logistics network efficiency?
An efficient logistics operation can deliver goods or services to their intended destination at the least cost with minimum delay. It should be able to handle the current volume of traffic reliably and accurately with a high level of confidence. Improvements can come from outsourcing transport logistics, implementing technology solutions such as warehouse management systems (WMS) as well as by continuously monitoring and adjusting operational processes. An efficient logistics network has a direct and positive effect on customer retention and revenue growth.
How do we measure logistics network efficiency?
The metrics or key performance indicators (KPIs) to monitor will vary depending on the characteristics of your supply chain operation. The KPIs to follow are those that help identify areas for cost savings and process improvement, keeping mind the main goal: customer requirements and satisfaction. One example is on time, in full (OTIF) which is used in the retail sector. This requires the correct quantity of goods to arrive within the agreed-upon timeframe. What percentage of your deliveries are OTIF? Pick a few KPIs in each stage, e.g., order processing, inventory control, warehouse and distribution costs and transport, that have potential for improvement. Choose KPIs based on business goals and objectives.
Current trends in logistics network optimisation
- Digital solutions
Implementing cloud-based software solutions means you can automate processes and improve efficiency.
Some of the key benefits include:
- Improved inventory management
- Faster and more accurate order processing
- Lower transportation costs
- Increased visibility across the supply chain
Solutions such as warehouse management systems (WMS) and transport management systems (TMS) are used to automate processes, streamline inventory management and streamline delivery routes to reduce costs. Technology tools use artificial intelligence (AI) and the Internet of Things (IoT) to help deliver efficiencies in these areas as well as in demand forecasting and the mitigating of risks.
- Partnerships and collaboration
A current trend is towards more collaboration and establishing trusted relationships with suppliers and companies with which you can share resources. By partnering with an established third-party (3PL) logistics provider you can reduce transportation costs while improving efficiencies. You can take advantage of their infrastructure, expertise, and resources to improve your operations through:
- Reduced transportation costs
- Improved inventory management
- Increased order accuracy
- Faster order fulfilment
- The power of data
By collecting and analysing supply chain data in your network you can identify patterns and trends. Sharing of reliable, real-time information through multiple communication channels delivers the visibility that promotes faster, informed decisions. As we accumulate large amounts of data stored in different ways and in different places, there is a lot to gain from implementing such technology. A data analytics solution lets you monitor and track activities in your supply chain in real time, allowing you to take corrective action quickly and effectively. The improved visibility enables you to spot potential problems and bottlenecks before they occur. Supply chains have traditionally been mostly reliant on manual processes.
Leveraging new technologies such as WMS and TMS and data analytics solutions are the way to go while you are continuing to develop supplier and other partnerships.
When to make the move toward optimisation?
You can start now. Changes in the external economic environment and customer preferences mean that operations need to be monitored and improved continuously. Internally, a period of rapid growth or an expansion of sales channels will also prompt a review. An evaluation of your logistics network is the first step towards optimising it. A detailed analysis of your current operations will help identify key areas where benefits can be found. There are often savings to be achieved quite quickly in inventory carrying costs and transportation.
Our five-step approach to logistics network optimisation will create a road map. It will be aligned with current and future strategic needs and will allow for changes in direction if events turn out differently. Ultimately, it will deliver a vital competitive edge in customer service.
- Define the Goal. What are we, as a business, trying to achieve?
- Gather the data and cleanse it. Data is often unreliable, not what it seems.
- Document the current situation. What are our limitations?
- Logistics network scenario modellingto test alternatives
- Evaluate alternative logistics network designs and costs
Are you ready to take that first step? Read more detail about the five steps here
https://www.sccgltd.com/featured-articles/five-steps-to-an-optimised-logistics-network/
The Supply Chain Consulting Group can help you unlock the full potential of your logistics network. Our expertise will guide you in optimising operations, reducing costs, and improving customer satisfaction. With our five-step approach and deep industry knowledge, we provide customised strategies tailored to your business goals. Trust us to navigate the complexities of supply chain management and deliver a vital competitive edge. Take action today and partner with The Supply Chain Consulting Group for seamless logistics excellence.
Contact us at +44(0)1926 430 883 or info@sccgltd.com.
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