10 Jul How Inventory On Demand Will Give You a Competitive Advantage in B2B OEM
The B2B supply chain for Original Equipment Manufacturers (OEMs) is complex and challenging to optimize. This complexity, with multiple suppliers, global transportation and dynamic distribution requirements, highlights the need for a new approach to supply chain.
Of course, any discussion about new strategies suggests risk and uncertainty; risk-averse executives in a B2B enterprise may be hesitant to make changes to a functional system of manufacturing and transportation, but the truth is that old-fashioned supply chain management strategies aren’t cutting it these days. Global enterprise is increasing, with more businesses adapting their infrastructure to support organized supply chains spread across disparate geographic regions. For supply chain executives, this means more competition and an increasing demand for consistently high service levels.
These increasing demands on performance make typical supply chain optimization strategies ineffective at producing productivity and efficiency improvements. And as outsourced supply chains have become the standard for B2B OEMs, executives need to understand the new strategies that can offer a competitive advantage.
A New Type of Optimization
The typical B2B supply chain is a non-linear structure that is becoming increasingly difficult to track. Outsourced supply lines aren’t “chains” in the typical sense—they’re more akin to interconnected matrices comprised of partners, suppliers, and providers. And as supply networks mature, optimization strategies are maturing alongside them. This brings us to a new type of supply chain optimization: Inventory On Demand (IOD).
IOD is a forward-thinking system of supply chain management that not only improves control over every aspect of the B2B supply chain but also decreases risk for those using it.
Supply Chain Visibility
IOD offers a multitude of revenue-driving optimizations to the average supply chain. These enhancements are made possible by the key framework on which IOD is based: Third-party ownership of goods from factory to customer and the resulting control over costs.
One of the biggest problems facing B2B supply chains is visibility. In our globalized marketplace, B2B supply chains are spread across multiple providers, each of which has their own standards and best practices for transportation and distribution. This makes it hard for B2B organizations to monitor the consistency, quality, and efficiency of each shipment.
And of course, efficiency and visibility are closely tied. Clarity of the supply chain is necessary to synchronize manufacturing, procurement, and distribution. This is the first primary benefit of end-to-end inventory management: B2B OEMs are guaranteed better visibility of each step of their supply lines, no matter how many suppliers, trading partners, or logistics providers are involved. IOD transfers ownership of the supply chain to a third-party provider that can ensure each leg of the process matches the B2B OEM’s needs.
Aside from supply chain efficiency, IOD supports B2B OEMs by offering granular control over inventory management. And while inventory control might seem like an afterthought compared to streamlining operational costs, optimized inventory management can provide some of the most drastic improvements to supply chain value.
Broadly, IOD leverages available inventory in innovative ways to increase the flexibility of the supply chain. IOD uses a system of end-to-end management and distribution to control inventory flow. Unlike traditional inventory logistics, IOD recognizes in-transit inventory as a store of goods. This system allows OEMs to expand their service capabilities by improving the flow of goods to each value-adding location in the supply chain.
IOD allows B2B OEMs to time- and place-shift procurement, while decreasing reliance on buffered inventory. Instead of buying goods when the manufacturer finishes them, the B2B OEM purchases them on the day they’re ready to be delivered to an end customer.
In addition to providing necessary productivity boosts to the B2B supply chain, IOD decreases risk for OEMs. Ownership of finished goods is transferred to 3PLs after manufacturing; this reduces the number of assets under management that supply chain executives must account for without decreasing the value of each shipment.
Inventory On Demand for B2B OEMs
B2B OEMs deal in high volume production where even modest improvements to the supply chain translate into drastic savings year over year. And of the new supply chain optimization strategies entering the marketplace, IOD offers B2B OEMs the highest levels of competitive and cash advantage.
Across inventory management, supply chain efficiency optimization, and risk reduction during distribution, IOD can accelerate revenue growth and reveal significant sources of inefficiency in the B2B supply chain. It’s more than just an optimization—it’s a whole new way of looking at supply chain infrastructure.
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