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Analyst Insight: As supply chains deepen in complexities, many supply chain functions are crossing over to the rest of the organization. The cross-functional skill sets created for supply chain execution tasks lend themselves to other functions, such as procurement, inventory holding costs, and business process re-engineering. Business process optimization can be applied to maximize efficiencies across the entire organization.
-Keean Persaud, managing director of Eval-Source
Areas where supply chain concepts can be applied are procurement and sourcing processes especially. Organizations can find procedures to optimize procurement processes, including proper supplier on-boarding as well as having a preset method that is quantifiable and that can adapt to any procedural changes. Investigating new procedures, utilizing business process efficiencies and/or technologies and process automation often simplifies tasks. Outsourced procurement can be an effective optimization technique to explore as a proper methodology. Quality standards for products and suppliers are established and risk management can be handled on your behalf during the creation of such processes.
Another area of the supply chain where rapid cost savings may be gained is inventory holding costs. New supply chain technologies and techniques have become available recently for customers to optimize their supply chains that can make a significant difference. Even if existing systems are already in place, are you utilizing the data to optimize your order volumes, utilizing warehouse space effectively, and reducing your stockouts? These conditions all relate to how you plan and forecast your inventory requirements. Inventory holding costs should be balanced to a pull model for consumer demand, thereby controlling production and minimizing time delays. Bill of materials rationalization can be gained and ultimate customer satisfaction can result. This applies directly to procurement and the amount of capital expense required for inventory holding costs.
Business process optimization can easily add to your bottom line results by maximizing both physical and technological resources. A few options are mentioned for organizations to utilize their resources:
• Work cell rearrangement to increase process flow and efficiency from station to station. This also includes workflows throughout the organization with built-in alerts and automation processes.
• Reducing excess order touch points from customer service to operations, which is performed through traditional order fulfillment, such as unnecessary reporting, (possibly) product reconciliation before shipping or waiting for a supervisor to administer the orders.
• The areas of systems administration and system functions are easily overlooked, as they are less tangible and are harder to quantify. Systems administration often creates redundant data and duplicate services to end users without realizing it. Administration should be assessed and reworked to deliver efficient delivery methods in a timely manner.
In 2011, organizations can optimize current procurement processes, reexamine inventory holding costs and maximize their existing business processes. A consulting firm may be just what is required to allow a thorough examination of the supply chain processes and offer new insights for automation as well as highlight how to use new technology to achieve optimal results. This best practices approach validates the "do more with less" philosophy, which will add to bottom-line results.
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