September 2011 | How-To | Ten Tips

Building Efficiency Into Your Supply Chain

Tags: Supply Chain Management

When it comes to supply chain efficiency, information is king. The more you know, the better you can manage the process and engineer improvements. Ellen Fontaine, general manager, strategic planning and business development, at Georgetown, Ky.-based third-party logistics provider VASCOR Ltd. offers this advice for boosting supply chain efficiency.

1. Seek opportunities to optimize. Optimization can provide reliable decision support for supply chain challenges such as network design, route mapping, and load building.

2. When in doubt, simulate. Although the time and expense required to run simulations make them impractical for some supply chain functions, they provide value by showing how solutions will play out in the real world. Don't waste a single dollar or minute on a solution that works in theory, but not in reality.

3. Pay for carrier quality. Using the cheapest carrier can backfire if it results in significantly increased damages or delivery delays. Some carriers' performance records justify the slightly higher rates they command.

4. Invest in 20/20 visibility. The earlier and more frequently you begin using visibility systems – preferably at the order management level – the better you'll be able to avert supply chain disruptions, reduce the need for excess inventory, and limit substandard supply chain performance.

5. Implement crossdocking. Flow-through warehousing facilities allow you to seamlessly receive, organize, and precisely time the delivery of most key components in your supply chain. These facilities can also provide value-added services, such as sequencing or sub-assembly.

6. Inspect and protect. Hire a logistics representative to inspect products for exceptions before they're transferred from the production to the logistics phase. Charge professionals with preventing damage and removing compromised shipments at key hand-off points, such as during loading and tie-down, and at the end of a transit.

7. Make your claims pay their way. Damage claims are a valuable source of insight that can lead to better performance. Invest in systems that help your company collect and analyze claims data – including mode, carrier, and location – so you can identify damage trends, determine root causes, and pinpoint responsibility. Use what you've learned to perfect your operations.

8. Establish a formal safety program. Although most logistics locations have safety and accident-prevention efforts in place, that's no guarantee your employees are as safety-minded as they should be. Increase your "safety spend," and your company could dramatically reduce incidents.

9. Institute formal quality-improvement programs. Invest in Lean, Six Sigma, and other initiatives. These programs often don't require a huge capital commitment for training, especially if you adopt a grassroots approach to train a few key employees, then let them educate the others.

10. Get help where you need it. From freeing up capital to getting a faster start in a key market, there are many reasons why it may be more expedient or cost-effective to outsource part of your supply chain to an outside provider. Choose a 3PL that employs supply chain efficiency strategies designed to benefit your company.