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Logisticians often seek to improve supply chain performance and efficiency to increase productivity and provide a better competitive advantage for their business. Optimizing the supply chain can mean many things and be done in many ways such as improving the picking processes, decreasing the processing time for shipping goods, improving inventory management, and much more. Supply chain optimization can be strategic or operational in nature. It can involve transformation change or increment improvements.
Generally speaking, the intent of supply chain optimization is to improve service levels by working on the speed, reliability, and accuracy of individual processes.
Ways to improve performance in the supply chain:
1. Clearly define your logistics strategy
The logistics strategy must be well-defined and realistic. It must be able to designed to deliver actual operational needs (for example clearing a target number of daily orders, meeting capacity needs, etc).
As a very basic step, you need to identify what kind of logistics volume your business needs to handle.
Small volume logistics operations:
- Maximum of 40 daily orders per working day.
- Operators can perform different functions at the same time such as reception, picking, and packaging.
Medium volume logistics:
- Maximum of 100 daily orders per working day.
- Operators should specialize in a given process.
Large volume logistics:
- Minimum of 100 daily orders per working day.
- Warehouse operations should be based on automation and combined use of WMS software, robotics, and technologically advanced storage solutions.
Regardless of the volume, another consideration is whether the work is being done in-house or is being outsourced.
Outsourcing: Third-Party Logistics
When outsourcing, you would hand over a part or entire supply chain management to a logistics service provider.
There are generally 5 types of logistic outsourcing models:
1 PL: Only transport
2 PL: Transport and storage.
3 PL: Transport, storage, flows of goods, and solutions related to information flow.
4 PL: Coordination and supervision of the supply chain.
5 PL: Comprehensive logistics management and logistics engineering services.
2. Hire a Supply Chain Manager
If the business model justifies it, you can consider hiring a professional to be in charge of optimizing the entire distribution chain. It is important to hire someone who is capable of managing the complete end-to-end project of identifying the needs of the business and subsequently driving the change. Being able to count on a good supply chain manager will allow you to adapt your logistics strategy to the real objectives of the company. Moreover, a supply chain manager will make sure that the conditions that lead to a breakdown of stocks are not created in the warehouse and will ensure that the level of stock stored is always correct, thus avoiding excess stocks and the risk of the goods being scrapped.
3. Better organize your warehouse
- Assign work and activity zones intelligently. This means that defining the different areas of the plant is crucial. After designing the warehouse, determine what type of activity will take place in each area (loading and unloading, storage, cold rooms, picking, etc.)
- Storage: Operators should establish precise product location criteria designed according to the storage method required.
- Signage: Signs in the warehouse increase safety, make operations smoother, and increase worker productivity.
4. Maximize cross-docking
If possible, with cross-docking, you can receive goods and send them by limiting storage operations. A cross-docking warehouse will allow you to reduce or completely eliminate storage costs. It is an ideal strategy for stock management that reduces the volume of product movement.
5. Warehouse automation
Many supply chain processes gain efficiency through better coordination between different agents and overlapping processes. But sometimes companies fail to get a detailed view of what happens along the different points of the supply chain. This results in many issues that strategic changes will not change. For example, if there is any physical workflow bottleneck due to poor racking placement, this issue has to be specifically addressed. Process automation can benefit this aspect and bring enormous benefits to businesses. Automatic warehouses or automatic goods identification systems allow operators to better monitor what happens within the supply chain.
6. Lean management
Applying a lean management model within your company is a good technique to optimize your supply chain. Eliminating waste and delays in delivery, allows you to limit confusion in management, identify inefficient space and improve the handling of goods.
Some of the examples we just proposed to you can be implemented quickly, while others will take time. Operators should study the methods and decide on the way forward towards building a high-performance supply chain.
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