What is network optimization in supply chain? Supply chains are the lifelines of every business, and aligning your operations and communication can be key to supply chain optimization and ultimately minimizing operating costs.
Supply network optimization software takes this one step further – by optimizing the flow of information throughout your various supply chains, you can achieve greater visibility and ultimately greater efficiency.
Supply chains and supply networks
While a supply chain describes the series of processes by which a material, product, or piece of information progresses from the raw materials to the end-customer, a supply network refers to a more complex structure that encompasses multiple links and chains.
In today’s increasingly digital world, your supply network – unlike a linear supply chain – ought to be an agile supply chain and multi-directional system. Supply networks can allow for greater integration, improved communication, and ultimately optimized operations.
Overall benefits of a supply network
Utilize data-driven analysis
The level of integration that a resilient supply network requires often comes hand in hand with a high level of data integrity and visualization.
This can enable data-driven analysis, and when combined with machine learning or AI-enabled technologies, can facilitate predictive decision-making.
Meet the fluctuating needs of customers
With changing – and often rising – expectations from customers, regular optimization is often necessary to ensure efficiency and that needs are being met in good time.
Streamlining all processes across your supply network can go a long way to ensuring customer satisfaction down the line. An increased ability to predict demand can help you to quickly tackle potential shortages – with the customer none the wiser to an issue ever having arisen.
Gain a competitive edge
Trends of the last decades emphasized focus on the streamlining and optimization of processes not usually seen by the customer, such as storage, warehouse functions, and transportation. With many companies still focusing on the supply chain now is a great time to go one step further through data-enabled supply network optimization. Real-time data-enabled insights are just one way you can gain that edge.
Most, if not all, businesses have a dramatic effect on the climate and environment due to their production, marketing, and transportation methods. A supply network optimization overview can help companies take into account everything society needs organizations like them to do, and consider sustainable policies when streamlining their processes.
Improve speed and resiliency
Exactly how fast your production cycle works and turns a few ingredients of material into a sellable item to the customer can also be determined and changed by the optimization of your supply chain.
The effect of an optimized supply network is even greater – where shortages or sticking points in your chain might impact the resiliency of your supply, a supply network facilitates efficiency, even in the face of VUCA (volatility, uncertainty, complexity, ambiguity).
The benefits of an optimized supply network
Working through a production process that has been optimized is known to help reduce the costs of production and delivery while retaining higher profit levels, all while ensuring high customer satisfaction. 80% of companies say that streamlining their processes has helped improve revenue and satisfaction significantly.
While the benefits of supply network optimization can show themselves fairly early in terms of increased efficiency, reduced costs, higher profit margins, and overall business performance, more benefits make the shift worth it.
Better inventory management
A strong understanding of the inventory you hold and that which you need is essential in helping you cut costs while meeting consumer demands. This lets you avoid the risky situation of not having enough stock or material to produce while reducing the costs of single emergency purchases you would have to make in a tight spot.
With reliable and timely deliveries to your customers, resulting in minimum returns and complaints will automatically reduce the cost of customer care services you would need to adequately cover all consumer needs.
Long term supplier relations
As a company, manufacturer, or producer, it is integral to have long working collaborations with suppliers who you trust and rely on, as well as a network of those who can help you meet your targets in case of an emergency order shipment failure from another supplier. These relationships then help with order fulfillment, acceleration of delivery, as well as product availability. The improved visibility and communication that an optimized supply network can enable can help you to nurture these relationships.
Improved order fulfillment
Optimization and streamlining of operations and production will lead to faster delivery times, resulting in happy customers and good reviews, fewer complaints, and overall success! Optimizing helps you identify better transport methods depending on your needs.
Quicker decision making
With supply network optimization comes better visibility of all teams, responsibilities, duties, and production, and with better visibility, those in charge of making certain decisions can do so with all the information provided to them clearly and categorically. This helps analyze the information needed to make a decision and ensure efficiency with quick and well-informed decisions.
With AI-enabled data visualization and predictive analytics, this can be taken one step further to allow you to respond to potential issues – and decisions that need to be made – in advance.
Lower operational costs
One of the key ways in which people improve their profit margins is by lowering their operating costs, such as transport, supply, material, delivery, storage, and more. After comparing your costs to the average industry standard, it might be wise to study your costs carefully and negotiate with those who you can. Once again, the greater visualization that a digitized supply network enables can make this process a whole lot easier.
Supply network optimization strategies
While the best methods and types of optimization each company requires can only be decided upon after a deep and clear introspection of their needs and situation, some basic modern outlines can help you make a decision and customize it to your needs.
A smart and strategic supply chain analysis will provide you with a wide set of criteria on which to judge your needs and use your data to give you the answers you are looking for.
Optimizing your supply network using supply chain management software
Supply chain management software (SCMS) can help analyze data and information, execute transactions, and manage supplier relationships to create full efficiency. The software essentially ensures that all the different teams are on board and aware of the overview of all processes.
Functionality in software might be customized depending on a company’s needs but the average software includes operating information for demand forecasting, customer requirements, supplier management, inventory optimization, sales and distribution, and order purchase processing.
Optimizing your supply network using machine learning
Machine learning utilizes data, algorithms, software, and more to learn and integrate information about a business and its operations.
Machine learning typically is most useful at analyzing trends, identifying issues, and creating helpful insights.
Machine learning also then helps to automate many mundane tasks and allows leadership and departments the time and space to focus on more enterprising and strategic activities or decision making.
One of the most important factors of production that machine learning impacts is inventory management, resulting in efficient processes, demand, and higher profit margins in the long run.
Machine learning can also help to reduce waste, improve quality of production, clarify product flow in all different production locations and plants, all while providing reduced response times and clear and intuitive administrative practices.
Optimizing your supply network using artificial intelligence
Artificial intelligence, or AI, encourages company-wide visibility for all parts of the supply chain; an important factor in keeping everyone on the same page of production.
Network optimization using AI can help to deliver powerful optimizations and especially helps in terms of capacity planning, enhanced productivity, lower costs, and higher quality while ensuring a safer work environment for all those involved. With a majority of companies complaining about the loss of productivity due to the sweeping changes that COVID and lockdowns brought, AI can help you predict as well as manage your resources far better.
Optimizing your supply network using the Internet of Things
The Internet of Things – IoT – is a term that describes the network of physical objects that connect their sensors and software to communicate with one another, exchange data, interact, and provide other technological enhancements.
With more and more eCommerce businesses and stores demonstrating success, it is clear that you may not need a physical store to be successful if your product is of a certain kind. With the IoT, you can predict and work around risks that can hamper the optimum level of production or transport and provide real-time updates about product dispatch, delivery, routes, supplier updates, feedback from consumers and so much more.
These insights are very useful and can help to make decision-making and future-planning all that easier.
IoT can also be used to monitor real-time package and delivery journeys, analyze insights into container and shipment conditions, and navigate daily issues in the warehouse or production plant. This in turn can build and maintain strong global connectivity with your suppliers, those responsible for transport, and customer staff.
Ready to take your optimization to the next level?
Verusen offers supply network and supply optimization for the modern-age business, starting with an AI and machine learning platform supported by human expertise to get the perfect blend of flexibility and performance.
Reach out to us to start reducing your risks today.