Supply chain optimization lets you minimize purchasing and inventory costs, improve operational performance, and increase customer satisfaction. Before COVID-19, looking for ways to optimize your supply chain was important but not urgent. Today, pandemic-driven disruptions are making supply chain optimization mission-critical.
Thatโs why Richard Lebovitz, the CEO of a supply chain consultancy called LeanDNA, is offering ways to optimize your supply chain during COVID-19. Letโs take a look at Lebovitzโs recent article in Supply & Demand Chain Executive (SDC) and consider some key questions that Elasto Proxy, a rubber fabricator and distributor, recommends that you ask and answer.
These questions fall into three major areas:
- inventory optimization
- digital transformation
- planning for every part
Letโs take a closer look.ย
#1 Inventory Optimization
โInventory optimization is pivotal in turning the supply chain from a cost center into a competitive weapon,โ Lebovitz writes in SDC. To change your organizationโs mindset, consider the following questions in light of COVID-19.
- Are you carrying too little inventory?
- Are you carrying too much inventory?
- Are you ordering accurately?
If youโre carrying too little inventory, youโre risking stock-outs and stoppages in production. If youโreย carrying too much inventory, youโre tying up cash and running the risk that items may become obsolete. Following your sales forecasts can help you to order accurately, but COVID-19 has disrupted historical buying patterns. Thatโs where digital transformation and a plan for every part can help.
#2 Digital Transformationย ย ย ย ย ย ย ย
Digital transformation is the replacement of manual processes with digital ones, or the adoption of newer digital technologies to replace older ones. At a time when 87% of supply chain leaders say that they have a digital transformation initiative, thereโs plenty of buzz about automation and artificial intelligence (AI). Yet, digital transformation is also about asking and answering some fundamental questions.ย ย
- Is the data that youโre using accurate?
- Can everyone see this data?
- Are some people using different data instead?
- Is the right data actionable โ and by whom?
Lebovitz suggests forming โattack teamsโ within your organization to address these challenges. Then, โinstead of spending time trying to determine which spreadsheet is correctโ, he writes, you can โfocus on revenue-building initiativesโ. Digital technologies that support flexible decision making from remote locations are optimal but remember that robust data collection needs solid analytics.
#3 Planning for Every Part
A plan for every part (PFEP) includes data about every part number that comes from your suppliers and data about every finished goods stocking unit (SKU) that you send to your customers. Inventory optimization and digital transformation support PFEP, but youโll still need to address the following questions. ย
- Do your safety stock levels account for potential COVID-19 disruptions?
- Are your minimum order quantities (MOQs) sized properly based on demand?
- Besides lower MOQs, do your suppliers offer other ways for you to free up cash?
Although some businesses address these issues annually, Lebovitz recommends tackling them monthly if you can. The very best practice, he notes, is to plan for every part in real-time. Fortunately, with the help of the right manufacturing partner, you can begin to optimize your supply chain today.
Finding Rubber Fabrication and Distribution for Supply Chain Optimization
Elasto Proxy is a rubber fabricator and distributor with a catalog of standard parts, flexible custom fab capabilities, and value-added services such as kitting, parts marking, custom packaging, and warehousing. For over 30 years, weโve been supplying value-driven manufacturers with coils of rubber, finished gaskets, custom thermal-acoustic insulation, molded plastic and rubber parts, and other products.
If youโre looking for ways to optimize your supply chain during COVID-19 and beyond, weโd like to hear from you. Ask us about the benefits of outsourced fabrication vs. in-house production, why the prices youโve been paying to suppliers arenโt your true costs, and how vendor consolidation can support your supply chain optimization efforts. The answers may surprise you.