Last Updated on January 11, 2023 by Salman Khan
There were days when the Supply Chain was considered to be part of Marketing. But, now Supply Chain Management is considered an essential aspect of every business.
Multiple business aspects come under the umbrella of the Supply Chain. It’s not just about delivering the goods. But, Supply Chain consists of all the tasks included from purchasing raw material, processing it into the final product, and delivering the final product.
Not only this, nowadays, it is also concerned with getting feedback from customers and giving them responses.
Supply Chain Strategies must be formulated according to business. A business might require a more agile supply chain. However, sometimes quality is what matters more than agility. There can be numerous other Tips and Tricks for Expanding your Startup.
Owing to the current conditions of the market, and after COVID-19, online businesses have grown to a high extent. Nowadays, people are more interested in buying online. This has made companies think more about their Supply Chain Strategies.
List of Effective Supply Chain Strategies
The business giants have adapted different sorts of Supply Chain Strategies, few proved to be worth using while others caused them just a big budget. Out of those, we have separated a few strategies that you can implement in your business.
1. Collaborative Planning, Forecasting, and Replenishment (C.P.F.R.) Strategy
An equilibrium between the three metrics can be effective for the supply chain. All the relationships with suppliers, distributors, or retailers must be made carefully by forecasting the demand and supply requirements. Furthermore, the strategy should be made in accordance with the business needs and customer segmentation.
The strategy was formulated by business giant, Unilever. The adoption of the zero-inventory strategy by retailers, which calls for the optimum use of cross-docking and dispersion in warehouses, is largely to blame for the convergence.
To maximize asset use, reduce inventory, and boost efficiency, Unilever created collaborative planning, forecasting, and replenishment (C.P.F.R.) partnerships with specific retail clients.
2. Supply Chain Modernization
With the digital trends being drastically changed, there emerges a dire need of adapting modern Supply Chain tools for better results. Demand and supply prediction and forecasting have become crucial and to know the customer’s interest and market fluctuations, you need to adopt the latest technologies.
As Internet of things (IoT) networks, DevOps and Artificial intelligence (AI) technologies have improved, SCM teams are now better able to respond swiftly and automatically alter their supply chains to fit predicted demand. Automation and faster delivery time is one of the Top Core Benefits of DevOps.
The building of unified data models that are supplemented by outside sources is made possible by more businesses migrating their data and apps to the Cloud and utilizing ERP systems. This is enabling a new degree of planning precision and predictive power that was not possible only two years ago.
3. Outsourcing Business Functions
Another useful strategy could be outsourcing some of the supply chain functions and thus focusing more on the key business functions. This way you might save cost and additional hassle.
By contracting with third-party logistics (3PL) organizations, many businesses may reduce their fulfillment expenses. They do away with infrastructure installation, work management, and continuous maintenance by doing this.
The acquisition of warehouse space, replenishment of shipping goods like labels, cartons, and pallets, and management of overhead expenses like utilities and rent will all be handled by third parties.
Best of all, as their footprint grows, e-commerce businesses may become more flexible. But again, this might can ruin your brand image if the third party involved does not perform well.
4. Vertically Integrated Supply Chain
The strategy requires you to be involved in every step of the supply chain i.e. from acquiring raw material to delivering a finished product. For this purpose, you need to align the four macro operations of plan, source, make, and deliver.
A highly centralized logistics system will be required that gives the company the ability to efficiently manage and arrange its extensive network.
Also, all supply chain operations must be accessed according to four metrics: operational safety, rates of on-time delivery and order fulfillment, supply chain cost as a whole, and financial success in terms of cost-effectiveness.
The strategy was implemented by Starbucks in a way that they perform every supply chain function themselves i.e. from harvesting coffee beans to delivering coffee to their customers.
Starbucks is able to achieve a high level of efficiency and responsiveness, two factors that are crucial to the success of its business. This is made possible by its streamlined supply chain structure, management tools, and use of digital technology.
5. Improve Warehouse and Orders
Storage space is one of the first places businesses should optimize to boost their efficiency because it accounts for 15-20% of the cost of each order. Studies on space usage can identify potential fixes.
For instance, businesses should make use of all vertical space, combine all shipments of the same item into one spot, and make an effort to make warehouse lanes wide enough. Remember that before making modifications, you might need to look into your fire code.
Companies may improve worker productivity, lower inventory mistakes, and eliminate safety concerns by updating their warehouse floor layouts.
Segment the plan into different zones for goods-in, shipping, and returns to make the most of every square inch of available space. Picking time can be decreased using strategies like creating cross aisles or shorter aisles.
6. Sustainable Supply Chain
Last but not the least, businesses should ponder upon having a more sustainable supply chain. Owing to hazardous carbon emissions from the vehicles, the production unit should be kept closer to the warehouses and distribution units. Also, you should promote green products at every business level whether it is primary, secondary, or, tertiary.
The best supply chain strategies are those that cater to less damage to the environment and more benefit to customers.
In a Nutshell
Supply Chain Strategies must be made with careful analysis of the business. There are many other strategies that you can adopt depending upon your business nature, but try to incorporate sustainable means into your supply chain for saving the environment as well.