Learn how properly managing your supply chains can reduce costs, improve quality, and increase your productivity.
Logistics brings together all the methods necessary for the proper operation of a company. For a company to be competitive, it needs to have good supply chain management and aspects such as transportation, Shipments and supplies. Sometimes the company needs to make structural changes to improve its logistics. In other cases, they are small changes that make processes more efficient.
After all, properly managing this area has a direct impact on the quality of the service and the cost of the product. And here you will find competitive advantages and added value for your customers.
Here are the areas that you should consider in order to improve yours logistics and be more competitive:
1. Application of technology in the supply chain
These are tools that facilitate transparency in the supply chain, provide information about processes and improve the exchange of data between all members of the chain.
Some of the basic systems are:
- ERP: Integrated management systems
- RFID: Radio frequency identification systems
- SOP and CPFR: are B2B technologies and support order processing for product delivery
- TMS: Transport management. Used in collaboration with carriers, suppliers and customers
- CGA: Warehouse management system
2. Inventory management
The main goal of this practice is to ensure the availability of materials and products to meet demand. The point here is to define processes in order to manage the products efficiently.
- Use coding methods to identify materials and products. It facilitates standardization and is essential for quality processes.
- Use classification practices (e.g. ABC to classify materials according to their importance).
- Manage inventory in sync with inventory optimization.
- Implement a just-in-time policy to keep inventory at a good level and reduce inventory costs.
- Take advantage of the postponement strategy, which allows you to delay product customization as much as possible to better respond to demand.
- Invite suppliers to manage inventory. This is known as VMI and the goal is to improve the manufacturer’s service to the end customer.
- Purchase APS (Advanced Planning Systems) software to help solve supply chain problems.
3. Warehouse management
In some companies, warehouse can be up to 60 percent of the cost. Learning to deal with it is the key to being competitive. How can you do that Here are a few ideas:
1. Use automated collection systems that increase the efficiency of resources related to inventory management.
2. Plan the supply network strategically. Find the most economical way to send and receive the product while maintaining quality and customer service.
3. Use common bearings. It is recommended for SMEs whose geography is changing as it allows them to be flexible.
4. Have cache. They enable a more dynamic distribution and ensure a quick response.
4. Transportation management
This area is often associated with high costs in organizations. Hence, improving management is critical to competitiveness. This includes the implementation of network design strategies. Some of the best practices are:
- Cold chain traceability. This point is key in the food chain as it is responsible for temperature control throughout the distribution process.
- Traceability and security throughout the supply chain. This allows you to know the history, location and trajectory of a product for inventory and production control as well as coordination with dealers.
- Use of cross docking. It has benefits such as daily deliveries to stores, chain control, accuracy in deliveries, and savings on transportation.
- Use of multimodal transport. It is efficient for the transportation of materials and products. It also makes international transportation easier.
- IGroupage implementation. It is used in rail and road transport for several companies by means of one load. It serves to lower prices and limit the customer’s risk.
- Outsourcing. By outsourcing this process, you can reduce costs and improve efficiency.
- Reverse logic. They are all processes and activities to manage the return and recycling.
5. Outsourcing of logistics services
Outsourcing these processes is a good practice to improve competitiveness. This includes shippers, logistics service providers and integrated service providers. Specialists use advanced technology with the intention of providing the best service, e.g. B. electronic means of communication. For this scheme to work, you must implement collaborative practices with these providers. The costs will decrease and your efficiency will increase.
6. Procurement Management
Good planning is needed at this point to improve coordination between suppliers and customers. Note some of the best practices:
- Include purchasing management in the company’s planning to align it with business goals.
- The utility needs to know the business strategy. This in order to choose the most suitable management for the company. The procurement function in terms of cost, quality and service level of the suppliers should be selected based on the business strategy.
- Performance should be measured in terms of contribution to the business. In other words, clear metrics to identify the relationship between good purchasing management and results.
7. Use metrics
As in any business, logistics requires measurement and feedback using indicators such as inventory turnover, cost of goods sold and return on investment.
Here are some tips that you can follow:
- Use the SCOR model to make objective measurements of the supply chain.
- Consider logistics costs as part of sales (usually between 8 and 10%).
- Define the number of deliveries on time. It is measured as the proportion of the product that the customer received on time in relation to the total product that was sent to him by the supplier.
- Measure the days of the inventory. That is, the efficiency of the inventory and the days of rotation.
8. The relationship with suppliers in the supply chain
It is necessary to integrate business processes in order to respond correctly to the customer. For this, it is necessary to achieve cooperation between all members of the supply chain through mutual trust and the exchange of information.
- Assign employees to manage relationships with suppliers.
- Provide timely feedback to suppliers on their performance.
- Measure the perception of the supplier’s customer.
- Establish long-term contracts that will benefit both parties.
- Facilitating mutual cooperation.
- Meet regularly to understand your expectations and concerns.
- Share long-term business plans.