A lean supply chain helps to build a strong customer base. It also boosts a business’s profitability. A well-formulated flow increases efficiency as wastes get eliminated from the production process. Redundancies are responsible for increased costs of products hence lowered profit margins for the particular organization. Building a formidable supply and logistics management plan is not easy. No, it takes an earnest concerted team effort of various professionals working together to find means and ways to make the most beneficial impact to the customer while also keeping their revenues up.
How does it work?
According to the experts, there’s no one defined formula to follow when applying a systematic supply and logistics plan. The strategies vary from business to the next but all in all here are some of the salient aspects which get factored into any supply and logistical chain methodology: –
- Developing an optimized systems perspective
- Mapping out a value stream information flow
- Managing your customers demand and volatility trends
- Developing metrics to streamline the supply chain
Pros of the Strategy
- Reducing recurrent mistakes ups the returns on investments
- Adopting a cautious culture leads to reduced accidents at the workplace
- A lean supply chain ensures that there’s never a shortage in inventory or of raw materials
- Transparency serves to deter corruption and other forms of malpractices
- The strategy leads to satisfied customers
- Process leads to the production of better quality products
Let’s say you have company X which specializes in producing high-end clothes and apparel. This American product uses raw materials found in remote parts of Africa or Asia. Company X sets up a processing plant in nearby Mexico owing to high cost of labors and therefore production in the states. The raw material gets transported from its source to the factories where it is then worked on before getting shipped to America where it is transported to retail stores in malls.
Improving Efficiency and Profitability
The company has a non-lean supply flow and this is what it needs to do to gain a better competitive advantage over its peers in the same industry. For starters, they should try to set up a processing plant close to where the raw materials for their finished products come from. Second, company X should strive to set up online stores to sell their wares and stop over relying on the traditional brick-and-stone retail outlets. Additionally, the top management ought to take some time out of their busy schedules to train and enlighten their different suppliers on means and ways to optimize their processes.
Another trick the business can deploy to up their revenues fast would be to avoid flooding the markets with their apparel.
The law of supply and demand dictates that consumers respond better to scarce but quality products on the marketplace. Finally, company X is failing to deliver outstanding results owing to the fact that they most likely don’t have a certified logistics expert working there. These firms should consider hiring such a pro right away to witness tremendous turnaround.
Justin Bright – Brighter Logistics