12 Sep What If You Could Minimize Supply Chain Touchpoints?
Modern supply chains are always changing. The state of the industry is evolving, with more businesses adapting their supply chain infrastructure to try to create competitive advantage. But in a world of globalized and complex supply chains, this is no easy task. Even modest supply chains have numerous vendor touchpoints through which inventory must flow, and each of these touchpoints produces challenges for supply chain health:
- Excessive lead time in production and distribution
- Greater risks related to product and quality loss during handoff between vendors
- Increased liability for supply chain operators by extending the number of assets under management
These costs are unavoidable under traditional inventory management systems. But what if there was a way to rethink the inventory management system of the modern supply chain and improve processes so that the number of touchpoints is reduced as much as possible?
Rethinking Inventory Management
The supply chain is a “chain” in the truest sense—if one link is weak, the system as a whole cannot be considered strong. Underperforming touchpoints in the supply chain create substantial drag on its overall economic efficiency and competitive advantage. Improving inefficient supply chains begins with improving visibility. A survey of supply chain operations by Aberdeen Group revealed that 63 percent of companies with global supply chains have ranked supply chain visibility as a top priority for optimization. But with modern supply chains expanding to the global level and bringing in more vendors to meet service demands, achieving better visibility is an understandable challenge.
This is where supply chain executives may benefit from rethinking the way they manage their inventory. Instead of relying on the performance of each individual vendor in the supply chain, operators can increase their supply chain profitability and decrease the number of touchpoints required by transferring goods ownership to a third-party. This process is known as Inventory On Demand (IOD)—a groundbreaking methodology for streamlining supply chain operations.
Reducing Supply Chain Touchpoints
Instead of traditional supply chain VMI, IOD allows all inventory to be managed by a single third-party. This partner takes ownership of goods throughout each leg of the supply chain and guarantees their efficient movement from factory to final delivery, a process that uses smart distribution at regional centers to provide inventory to customers as soon as it’s needed. The advantage of IOD is the top-level view of supply chain economics it provides. With a single provider taking ownership of inventory, that provider can ensure the operational health and efficiency of each of the supply chain’s workflows.
Is inventory being routed back and forth along un-optimized transportation channels? Are regional distributors using the most efficient systems to get each item to the customer’s door? Through IOD, businesses can review each touchpoint and determine what steps, if any, may be reduced or eliminated completely to support supply chain efficiency. Supply chain operators gain valuable information on which touchpoint steps are underperforming and which have the most potential for improvement.
De-Stressing the Supply Chain
A growing trend in supply chain optimization is the push towards viewing supply chains as value-driving business partners. Only through inventory management protocols like IOD can organizations gain a complete view of their supply chains, reduce friction at each touchpoint, and reduce the stress of managing their supply chain relationships.
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