Four signs you need supply chain optimization


The verdict is in – and has been for quite some time: Supply chain optimization is adding significant value to companies in a wide range of industries. Many of the world’s most successful organizations now regard supply chain optimization and advanced decision support as their ‘secret weapon’. Here are a few reasons why:

  • An aluminum company reduced inventory by between 50 and 60 million euros.
  • A catering company was able to achieve on-time deliveries almost 100% of the time.
  • A logistics company reduced total operating costs by 12% – a huge saving that went straight to its bottom line.
  • A metal company took its delivery performance from less than 50% to over 90%.
  • An airport slashed flight delays by synchronizing the deployment of ground staff with flight schedules – in real time.

But supply chain optimization isn’t just about dollars and cents. Sophisticated planning and optimization also keep employee satisfaction high by enabling individual preferences to be reflected in rosters, and ensuring that overtime is distributed fairly.

So how can you tell if your supply chain would benefit from optimization? Here are the top four signs.

(1) Does planning require a lot of effort and attention? 

Do you have many planners or, perhaps, feel you should be hiring more? This is a sign that your planning is complex enough to benefit from supply chain optimization.

(2) Does planning take place in silos?

Do planners focus on optimizing individual stages or processes, while ignoring how each decision affects the process as a whole. For example, do they optimize the utilization rate of employees in each department while ignoring opportunities to save costs by deploying employees across the organization?

This is yet another sign that your supply chain would benefit from a platform that enables global – rather than local – optima.

(3) Are there frequent violations of plans?

Do you find it difficult to meet delivery dates, even though capacity is available? Are planners scheduling overtime although there are clear signs of overcapacity? Are costs higher than they should be because expensive raw materials are being used unnecessarily?

Violations are a sure sign that planning can be improved.

(4) Could disruptions be handled better?

How well do your planners handle disruptions? For example, how effectively and efficiently do they respond to rush orders, unexpected traffic congestion or absences due to illness? Can they reoptimize schedules immediately and mitigate the effects of any disruption throughout the supply chain?

If you answered ‘yes’ to any of these questions, there’s a good chance your supply chain would benefit from optimization and advanced decision support. So here’s my final tip: Powerful supply chain optimization isn’t just about computing power. For a real advantage, look for platforms that enable you to build on your competitive differentiators by taking all your specific rules, constraints and service levels into account.

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