7 Profitable Ways to Optimize Your Supply Chain Strategy


When used properly, supply chain management is intended to allow companies to develop and execute strategies that efficiently integrate all the players in a supply chain. From suppliers to manufacturers, distributors, and customers, the goal is to accomplish production and distribution at the lowest possible total cost. An optimized supply chain strategy will successfully meet customer needs.

Of course, it sounds great in theory but isn’t always that easy to achieve. Among the many issues that make supply chain effectiveness challenging are complexity in mass customization, product line proliferation, shorter product life cycles, and pressure for faster innovation. In addition, you may encounter stress from quicker technology cycles, tougher, non-negotiable service levels, extended global supply chains, and business cycle variability.

Although it’s a lot to account for, it is definitely still possible to optimize your supply chain strategy and make money. Here are seven profitable ways on how to optimize the supply chain strategy for your business:

1. Start with a practical supply chain strategy

One of the biggest problems with ineffective supply chain strategy has to do with the fact that it started with unrealistic goals. Although you want to give yourself the freedom to dream big, you also need to make sure that you’re setting goals which you can actually achieve.

A supply chain strategy needs to be accomplishable in order to be profitable, so it is important to outline specific, practical elements of process, technology, organization, control philosophy, and metrics.

When developing your strategy, think through the details and don’t be afraid to get specific, you’ll thank yourself later. Many businesses find it helpful to perform a freight audit to identify areas of vulnerabilities in their current supply chain. There are experienced freight audit companies that can help you streamline your supply chain in a profitable way.

2. Adopt demand-driven planning

A demand-driven plan based on real-time insights and demand shaping can make all the difference. In order to have a truly effective supply chain strategy, you need to ensure you’re prepared to response to risks such as suppliers going out of business, political upheaval, and natural calamities affecting manufacturing.

If you’ve accounted for all these variables in advance, you’ll be able to adjust pricing and promotions strategies to shape demand, move additional product quickly, drive revenue growth, or further expand margins for a high-demand product with limited market supply.

3. Be ready to leverage opportunities

Business, like life, is unpredictable and you need to be ready to seize the opportunities as they come. The key to having a truly successful supply chain strategy lies in having the foresight to leverage opportunities and mitigate challenging events so that your business not only survives but succeeds.

With the proliferation of cloud supply chain technologies, it is easier than ever to see exactly where all of their inventory is, in real time, from the store shelf back to the manufacturer. With end-to-end visibility, there is no excuse to fall behind. With greater power comes greater responsibility, don’t waste it.

4. Keep evolving your supply chain

In order to remain relevant, companies must deploy dynamic planning capabilities and continually tweak operations to ensure reactive dexterity to meet changing demand.

In the past, it used to be enough to wait until the end of the month or quarter to adjust production and supply. Nowadays, that is no longer the case. It is now crucial to be in continuous, dynamic response to market changes. Constant innovation is the only way to stay one step ahead of the competition.

5. Always keep the customer top of mind

A helpful supply chain strategy to keep in mind is to always focus on the customer. Supply chain management links all aspects of the process, but the customer is the final, and most important, actor. This entire network should ultimately be working toward to same send, serving the customers’ needs and offering them prices they are willing to pay.

6. Be in control of trade-offs

It’s a given that in business, there are going to be trade-offs between costs and services.

Smart trade-offs are critical to executing an effective supply chain network and achieving your goals. Too much emphasis on service can result in an excess of inventory, while too much attention paid to cost can lead to low customer satisfaction. In order for this dynamic to exist in balance, you need to be constantly re-evaluating some fundamental questions.

A good supply chain strategy will always be asking, what kind of inventory, capabilities, and suppliers are needed? Where should they be located? And should they be owned or outsourced?

7. Understand the value and risks of technology

Technology is your friend, but it is important not to become lazy and it allow it to replace the value of good old-fashioned work. Information technology should not be used to replace broken links in the supply chain, and it is critical that you understand the intricacies of the technology you use.

Processes complementing the company’s supply chain management strategy must be designed first, then the right technology infrastructure can support the strategy. Managers may be tempted to eliminate the critical human element and rely only on software to manage the supply chain. However, but it is important to remember that software can’t possibly understand a company’s strategic plan, or even adjust the supply chain when it fails to match customers’ needs.


log in

reset password

Back to
log in