Can supply chain costs really be shared?

This depends on how your organisation views its supply chain, the strength of its supplier relationships, the commonality of technology systems and the willingness to share financially sensitive data. During the early stages of a commercial relationship, cost outs are more easily identified and are planned to be achieved as short term targets.

As the customer and vendor relationship develops over time, both build a greater awareness of further opportunities and create common objectives to share these cost out opportunities. Significant shared savings will always be a function of the willingness and openness to share financially sensitive data.

How much money are we really losing within our supply chain?

This can be looked at in a few ways. Are you losing revenue due to a poor performing supply chain, are our inventory make or buy decisions made in isolation, are cost reduction programs implemented without an understanding of your supply chain or is our supply chain footprint carrying a significant warehouse fixed cost?. As there are many other factors that cause your supply chain to bleed financially, the core focus is to understand the "Total cost of your supply chain" and then take the right steps to implement change.

Does more supply chain visibility improve our performance?

Improving performance always relies on making changes in the right areas that will deliver the maximum outcome for your business.

By breaking down your supply chain into stages, process inputs and outputs can be observed and measured to capture actual performance against established targets.

The key is always to understand the detailed data flow that is driving these actual performance outcomes and then using your knowledge of the business to make changes in the right areas.

Having the right supply chain technology that captures this detailed data is essential for your decision making.

Are there hidden supply chain costs?

Depending upon the size and complexity of your organisation, the starting point is always the same "Learn about your supply chain".

 

  • How does it currently operate and is it efficient? Are our resources deployed in the right areas at the right cost?
  • Do we have too much money invested in inventory that is not turning over?
  • Are we using our warehouse(s) in the most efficient and cost effective way or should we outsource to a 3rd Party Logistics provider?
  • Are our supply chain technology systems operating efficiently by providing transaction speed and integrity for our decision making?
By working through these questions, we can formulate an understanding of your business to identify these hidden costs and develop ways to improve supply chain performance. What we will not do is to strip out cost in the short term at the expense of the health of your supply chain performance.