When it comes to creating your supply chain network, there are many factors that go into planning. For one, there is no such thing as a "perfect" network. Supply chains are as individual as snowflakes, and they are never truly completed due to ever-changing conditions.
Below, we've broken down the some step-by-step considerations when creating a supply chain.
Aspects to Consider
The main aspect of supply chain network design is optimization. Oftentimes, optimization cannot happen without first internally looking at your company goals and determining what you need out of your supply chain. This can be done by looking at the following:
Pricing
Peak season isn't the only time carrier prices shift anymore. We've seen a new annual hike of shipping rates in large carriers such as FedEx and UPS, an average hike of 5.9% across the board. This reflects the lack of available transportation and drivers, as well as disruptions caused by the COVID-19 pandemic. The effects of the pandemic on the shipping industry have not gone away, and likely will continue to affect the market for the foreseeable future.
Mine Your Existing Transportation Network
If you're reinventing your current supply chain, it's important to factor in your existing network of manufacturers and transportation. Auditing the information from your own services is an excellent way to gain data about what is working, and what isn't. Pay special attention to partial loads, multiple carriers serving similar lanes and high-cost transportation segments.
Your Current and Future Inventory
Will your inventory be heavy and difficult to package? Will you be shipping across borders? What are your deadlines for having packages in the hands of customers? Inventory management should be the main priority in your supply chain design.
On the other hand, you may determine that it's better not to manage your own inventory. If you are considering outsourcing your inventory ownership, it may open up potential to move goods via more consolidated or slower, more cost effective means.
Morgan's Inventory on Demand® gives ownership of your inventory to Morgan until you are ready to use or sell it. You'll take ownership for a significantly shorter period of time (sometimes 5 days or less). No more products or parts just sitting in your warehouse — this "invisible stock" becomes available exactly at the moment it's ready to be sold.
Now that you've taken a moment to consider some key parts of your supply chain, it's time to take a look at designing your own.
Create a Road Map
Your supply chain design should have the right mix of ease and cost-effective solutions. You can design one based on the following criteria:
- Define your objectives
First things first: you need to define what your goals are as a business. It seems like a no-brainer question, but without the proper goal in mind, it can be difficult to reach it. Consider the following:
- What level of customer availability is needed?
- How does transportation relate to my warehouse strategy?
- How much inventory should I be carrying at one time? Should I look into outsourcing my inventory to ease transportation pressure?
- What routes would be best utilized to save the most on transportation?
- Are there opportunities for consolidation that have been overlooked?
These questions are simply a starting point, but they should help you determine what is most important to your bottom line.
- Gather important data
In order to make business decisions, you need the data to back this up. While gathering data about shipments can often be time-consuming, these numbers can be key in determining your best assets. Look for transportation lead times, warehousing costs, product demand and container type, manufacturing of raw materials cost (if applicable), and inventory cost. Often, recent RFPs have end-to-end information that can be mined for efficiency improvements.
- Analyze that data
Now that you've gathered that data, it's time to put it to good use. Your data can give you key insights into how you can consolidate shipments.
Simple optimizations can include:
- Re-imagining distribution and fulfillment locations and aligning them with best transportation options
- Consolidating shipments to save on export fees and transportation costs
- Strategically sourcing materials in bulk to avoid cost fluctuations and availability gaps
Calling in the expertise of an expert to take a critical look at your supply chain data to help identify where things can be improved is key to your organization improving your process.
- Implement and refine your process
Finally, it's important to keep an open mind. As we've seen in the wake of the pandemic, the market can change on a whim. The software business has a mantra: Ship and iterate. That means never being satisfied with the latest design. Keep on iterating with the data you gather from your operations.
Analyze with Morgan
Morgan's unique approach to supply chain design can assist your organization in optimizing and creating a system that runs smoothly for less. Our experts are here to help you build out a customizable solution that works for your business. Reach out to us today to talk to an expert.
