Analyst Insight

Although supply chain analysis can be a difficult, and lengthy undertaking, the benefits are considerable. Cost reductions, ensuring a constant supply of products, new revenues generated from previously untrackable tasks and services, and optimization of warehouse operations all go straight to the bottom line, and are all available to the organization willing to make the effort.
-Dylan Persaud, senior ERP/SCM analyst at Technology Evaluation Centers

As organizations seek new ways to control costs SCE has become an area to examine that will add to bottom line results.  Analysis and re-engineering of business processes of supply chain execution systems can yield extensive savings while allowing the organization to streamline its operations.  Quick wins may be achieved by analyzing the components within the supply chain execution systems, namely demand management, supplier relationship management, warehouse management and transportation management. 

Things to consider:

Ensure continuous product supply-Reduce inventory holding costs by keeping costs in line by use of the demand management system.  Consistent and efficient planning based on a combination of traditional forecasting methods and customer driven demand can dramatically reduce inventory holding costs by not overstocking products that tie up working capital. This forecast can then be shared with the supplier relationship management/global trade management system to strengthen the overall supply chain.  

Improved communications between suppliers-This ensures a constant supply of product within the supply chain. Supplier relationship management/global trade management allows the organization collaboration and auditibility between suppliers, and trading partners, both domestically and globally, can answer the inventory visibility questions. Who has my inventory, where is it within the supply chain, how many do I have and when am I receiving it and by what method am I receiving my products? By allowing forecasting into this module/system the entire supply chain can accommodate changes, both negative and positive, react to delays, and audit supplier quality to facilitate the flow of goods throughout the supply chain

Optimize resource allocation and utilization-A warehouse management system that provides supply chain analytics data may be used to calculate more efficient usage of labor, equipment utilization, pick-pattern efficiencies, and storage capacity. These, as well as time, can be maximized by analyzing the data and being able to correct broken business processes to lower costs. The additional traceability that these systems offer reveals new tasks such as additional handling and special storage requirements that can now be invoiced which is an opportunity to capture extra revenue that was previously unavailable. 

Reduce overall distribution costs-A transportation management system enables an organization to examine and control the transportation spend.  Organizations are using tools that optimize cubing within truckloads, containers from abroad, dock scheduling for inbound and outbound deliveries, optimized routes for more efficient delivery options, load balancing, longer and shorter pickup cycles depending on product. Software-as-a-Service models are even being heavily considered as ways to increase margins and lower overall distribution costs.

The Outlook

To meet customer trends, ERP/Distribution systems have extended their offering to include content management, supply chain analytics, workflows and activity-based costing which have become standards to ensure a minimum level of service.  Traditional supply chain execution systems did not offer these capabilities as one integrated solution. These new tools enable growth and even assist in overall profitability for the organization.

By investing the time and effort in analyzing and updating supply chain execution processes covering demand, supplier relationship, and warehouse and transportation management systems, organizations can add to bottom-line results.