The very monotonous nature of the supply chain presents a unique opportunity for supply chain managers that few are aware of and even fewer use to their full advantage. Day after day, week after week, and year after year, companies go through the same processes of acquiring raw materials, shipping them to manufacturing facilities, turning them into useful products, packaging them, and shipping them to distributors. Sometimes, this also involves reverse logistics, wherein the products are moved backwards in the process due to defects or damage.
This article is for Premium Members only. Please login below to read the rest of this article.
Not a Premium Member yet? Become one today.
[show_to accesslevel=’Premium Members’]
This redundancy allows managers with the foresight to take advantage of it, the opportunity to identify places within the supply chain that can be made more efficient. One problem consultants often see within a supply chain is the tendency for companies to compartmentalized their processes within each department.
For example, the packaging department decides to shave a few cents off of the cost of shipping the products by using less durable packaging. When these departments are isolated from one another, this department may never realize that the cheaper packaging is saving a few cents per item, yet costing the company many dollars in higher rates of damaged products that have to be dealt with and replaced.
Consultants are advising companies to take the “cradle to grave” approach, and open communications among departments. When different pieces of the organization come together, it’s possible to identify areas such as this where improvements can be made, costs can be lowered, and the end product can be made superior. This communication should include people from purchasing, logistics, packaging, inventory management, repair, and recycling.
The product should be treated as a single inventory system from beginning (acquiring raw materials) to end (sale or recycling of the product). By taking a more holistic approach, companies can easily find areas for cost and labor savings, making the company more profitable and efficient. Consultants estimate this approach can save 10 to 20 percent in operational costs. [/show_to]
Global Procurement & Supply Chain Professionals Read This…
…Carefully curated procurement & supply chain issues that make you look smart, sent to your inbox every week.
PLUS: Get the FREE Procurement Case Study when you subscribe: “How McDonald’s Overcame Global Supply Chain Obstacles”