3 Ways to re-evaluate your approach to supply chain planning
Though most businesses are stabilising steadily in the post-pandemic scenario, they are revisiting and finetuning their strategies to manage market volatility. Supply chain planning is a prime issue of focus to optimise operations and keep businesses afloat. Businesses, having learnt from pandemic scenarios, continuously assess the viability of stocking up raw materials for manufacturing. Several businesses have acknowledged the need to move beyond ad-hoc remedies to structural reforms to restore resilience and optimise costs.
In the post-pandemic era environmental consciousness has become an important consideration. Sustainability queries relating to raw material sourcing, carbon emissions, the potential for the use of renewable energy, and other such concerns are being raised. This scenario is forcing businesses to rethink their strategies to satisfy all stakeholders. Here, we discuss the need to revaluate supply chain planning to achieve maximum efficiency in business processes and as a result boost profit margins.
- Rethink your products
- Build resilience in sourcing and inventory management
- Explore on-demand warehousing
- Deploy suitable technical tools
In the pre-pandemic era, it was okay to maintain a quantity-first mindset and work with a stockpile. However, quantity-first is not an efficient business strategy when raw materials are expensive and scarce. Rethink your products to reduce the dependency on raw materials whose sourcing includes challenges such as short supplies or highly dynamic pricing.
You can approach the process of rethinking products in two ways. The first approach is to identify fast-moving products based on customer-needs-and-demand forecasts. Manufacture only those products that are in demand and maintain raw material stock accordingly. Revaluate scarce resources used in multiple products to redirect them towards manufacturing in-demand products. The second option is to rethink your product design to eliminate dependency on short-supply or high-risk resources. This strategy can build supply chain resilience in the long term and help steer your manufacturing strategy to a quality-first mindset.
Assess your sourcing and inventory management strategy from a point of view of building resilience into it. Evaluate your suppliers and create a robust pipeline of multiple suppliers for critical raw materials. Do remember that having your suppliers close to your manufacturing units is the ideal scenario. This strategy builds resilience into your sourcing operations and ensures that your manufacturing process is not severely affected by any disruptions. Reducing the shipment duration of raw materials speeds up the supply chain and, as a bonus, reduces your carbon footprint too. There is also an added advantage of optimum utilisation of warehouse space.
For your raw material inventory, watch out for price reductions and try to purchase when prices are lower. Analyse data related to manufacturing and sales to arrive at a figure for optimal reserve stock or what is called safety stock which can help build flexibility into your manufacturing capabilities. This strategy is a deviation from the lean inventory, just-in-time model to a more flexible just-in-case model. A balance between the lean inventory model and the safety stock model should enable you to manage your product inventory at appropriate levels.
Revaluate your supply chain planning and try to find on-demand warehousing facilities. This is an innovative approach that has been popularised by e-commerce companies. It provides businesses with the required agility and flexibility to scale supplies based on demand. Online marketplaces also take advantage of the demand created by this strategy by renting out extra warehouse space to other companies whenever the need arises. Businesses can utilise this approach to meet short- and long-term storage needs and optimise storage-related costs. A facility of this kind is immensely beneficial when a business is exploring new geographies. Instead of committing capital investment outright, businesses can take warehouse spaces on short-term rentals when they are testing waters in new markets. This approach is of immense help to ease supply chain issues to meet varied requirements.
Advanced AI-powered supply chain management software is now in use and it automates the complete supply chain processes. The software covers aspects ranging from inventory and reordering levels to raw material tracking, supplier performance, shipment status and a lot more.
The adoption of suitable technological tools can ensure substantial visibility into the complete supply chain network, which in turn can enable organisations to make changes as and when needed. AI-powered analytic insights provide that visibility.
Some notable use cases of AI-powered analytic insights are:
- Using predictive analytics to determine optimal inventory levels, even by specific geographies.
- Leveraging accurate demand forecasting to understand future market trends and planning accordingly.
- Utilising multifaceted insights for effective production scheduling and making informed decisions.
- Understanding and planning warehouse locations and sizes.
- Mapping and optimising the logistics of fleet routing and scheduling.
These supply chain planning strategies provide a roadmap for the optimisation of various resources and processes. Depending on the nature of your business and the current challenges, you could choose to implement one or more of these to gain efficiency. These strategies help future-proof your supply chain to achieve the agility and resilience needed to manage disruptions to the production pipeline.
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