Most global companies aim to have the most efficient supply chain possible. A well-functioning supply chain is also an efficient supply chain.
An efficient supply chain is a supply chain that functions and operates and does so at the most optimal level possible. An efficient supply chain can excel at getting products or services ordered, shipped, and to the end purchaser in the most efficient way possible.
Table of Contents
- An Efficient Supply Chain
- Performance Metrics Of An Efficient Supply Chain
- Attributes Of An Efficient Supply Chain
- Ways To Help Become An Efficient Supply Chain
- Related Content
An Efficient Supply Chain
Any company investing in the global economy should aim to have the most efficient supply chain possible. How a company manages the supply chain aspect of its business can determine its success in its business venture.
An adequate supply chain is not the same as an efficient supply chain. A company can have a supply chain that is effective in that it does all the things it needs to it.
An effective supply chain can order products and get them shipped to the consumer or customer; doing these steps does not make the supply chain efficient.
An efficient supply chain can do all these things, such as ordering products, getting them shipped, and then on to the consumer, but they do it efficiently. An efficient supply chain will do more independently and without significant errors.
The goal of any company in the global economy should be to have not just an effective supply chain but the most efficient one possible.
Performance Metrics Of An Efficient Supply Chain
A supply chain that wants to measure how efficient its supply chain is has metrics that can help it measure the efficiency of its supply chain process. In today’s complex world of trade, these metrics are more critical than ever before.
The Key Performance Metrics of an Efficient Supply Chain:
Here are some of the key performance metrics of an efficient supply chain. These are just the basic metrics, and as the world continues to become a lot more complex, additional layers can be added to each of these metrics.
- Time – Time is one of the metrics that a company can use to see how efficient its supply chain is. Things from how long it takes to ship something to a consumer to how long it takes them to get orders out to vendors. Things to also consider include on-time deliveries, on-time processing, purchase orders, and on-time fulfillment orders. All these aspects of the supply chain have to do with time and how quickly and efficiently a task can be performed.
- Costs – Cost is another metric that a company can look at for how efficient their supply chain is. The cost issue is also the waste issue. The cost would include things as inventory, managing cost flows, and keeping costs and wastage down to increase profitability.
- Quality – Quality is another metric for a company to use as their supply chain metric. Quality can help to ensure a customer’s satisfaction; the customer will have a great experience and want to return to purchase from the company again. Quality also has to do with efficiency since if a product is not up to standard and has to be manufactured, it is not only costly but will also have a huge impact on how efficient a company is.
In reality, all these three basic metrics do not work alone, but they work together. For example, if there is a quality issue in manufacturing, it can affect both the time efficiency and the costs. The time to produce or re-produce a product will go up.
Attributes Of An Efficient Supply Chain
A well-oiled supply chain machine would be when time, costs, and quality are all under control and running as efficiently as possible.
Efficiency is all about when a company uses all its resources in the best way possible to ensure a fast yet smooth running of all its systems.
The efficient supply chain will also optimize its resources, including technology, human, financial, and physical. An efficient supply chain using its resources will help ensure they are working at the optimum operational costs and efficiency.
An efficient supply chain will also be one that will meet or exceed the actual demands that are placed on the supply chain.
An efficient supply chain is also set up to look at time. The business will constantly look at how they get products to the customers more efficiently and quicker than before.
An efficient supply chain is not afraid to look at new technology and see how it can help them become more efficient.
A company can usually beat out its competition when its supply chain becomes more efficient because an efficient supply chain is constantly evaluating its supply chain in real-time for everything from waste to unnecessary costs to delays.
Because an efficient supply chain understands that it is essential to understand what is happening when it is happening, and not months or even years later, this helps to make them more efficient. The efficient supply chain understands that a bottleneck not dealt with be become a huge problem.
Ways To Help Become An Efficient Supply Chain
There are ways a company can become efficient in its supply chain. Each of these ways alone does not make the company efficient, but usually, it is a combination of them.
Here are some of the ways a company can ensure they have an efficient supply chain:
Technology
One of the most important driving forces in today’s supply chain is to ensure that a company uses the latest technology to help them become efficient. Today, in the world of AI, the cloud, computers, and machine learning, it is more important than ever that companies look to embrace new technologies and use them in their supply chain.
Today, much of this technology is also more economically viable than in years past. A company can become efficient and use more high-powered technology without added cost.
Human Resources
One of their highest costs is their employees’ or human power for many companies. An efficient supply chain will look at its human resources and ensure its employees are well-trained and use the latest technology to do their jobs.
Many kinds of manufacturing still need human beings to be on the production line and make the products; an efficient supply chain will look at ways to train and ensure their employees are the best trained and most efficient.
Streamlining
Today, one of the most important aspects of efficiency is its ability to streamline all its processes to be as efficient as possible. Efficiency means being able to streamline their business to avoid unnecessary waste.
The UN Food and Agriculture Organization has said that 30% of all food is wasted globally through the supply chain, and this waste, in turn, contributes to 8% of all greenhouse gas emissions. So, not only does the process of getting food to our tables show a massive amount of waste associated with the supply chain process. The lack of streamlining and efficiency in the food supply chain hurts the environment and wastes food.
The global food industry is an example of a sector that has not learned to streamline its processes to ensure unnecessary waste and efficiency.
Listen To Our Podcast, Efficient Supply Chain, below or by clicking here.
Supply chain efficiency is something that every company in the global supply chain should look at. As companies improve their supply chain processes, their efficiency will increase.
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Related Content
How Do Information Systems Support The Supply Chain?
Information systems and the information we can obtain are critical in any supply chain; we must have and use accurate information to make correct decisions.
You can discover more by reading How Do Information Systems Support The Supply Chain? by clicking here.
What Is The Difference Between Supply Chain Management and Logistics?
Supply chain management is about the collaboration and partnerships to get the goods from raw material to the end consumer; it is about the partnerships and alliances within this process. Logistics is one part of supply chain management; logistics involves moving goods from one place to another.
To learn more about loading a dry shipping container, you can read our blog on What Is The Difference Between Supply Chain Management and Logistics? by clicking here.
