HomeNewsSupply chain optimisation for maximum economic performance

Supply chain optimisation for maximum economic performance

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The quest for efficiency is ever increasing in businesses and successful companies worldwide have embraced advanced supply chain processes such as vendor-managed inventory and supply chain finance.

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They are also capitalising on new technologies to improve performance such as collaborative demand planning, data synchronisation, electronic product codes and e-invoicing.

Buyers now prefer suppliers who practice supplier chain optimisation worldwide.

It comes with its own challenges for suppliers.

They are faced with more customisation as they struggle to comply with unique support services requested from their large accounts.

No two customer-approach supply optimisation work in the same way resulting in a myriad of order forecasting, fulfilment and logistics processes and a wide variety of technology standards for visibility, collaboration and synchronisation.

All in the quest to satisfy the growing complexity in the customer demand chains.

Local suppliers have been lagging behind in driving supply chain optimisation.

They are yet to adopt new business models that reduce the burden on the buyer whilst assuring themselves of future business.

The procurement game needs to be changed, the mind set of buyers suppliers must change.

Room for traditional “wait-and-see” and “hide-and-seek” no longer exists.

It is time for engagement to foster mutual relationships rather than waiting for invitations to quote.

Techniques such as vendor-managed inventory that leverage your buyer’s financial position are yet to be utilised by serious marketers.

In essence, it reduces the obligation of a buyer to keep large safety inventories just in case since a mutual contract exists with suppliers to satisfy buyer’s demand before a payment is due.

Most local transactions are on cash basis, all inventories that the buyer holds is already paid for or is available on short term credit lines.

This affects the responsiveness and agility of competitive supply chain networks.

Suppliers who are engaged in developing their core competencies consistently outperform their competition. Innovation to secure markets is necessary.
Manufacturers need to explore vendor-managed inventories such as consignment stock arrangements and framework contracts.

Supply chains are moving from “push” built around the needs of the supply assembly line to a customer-centric demand-driven model.

This supply chain manages demand rather than merely responding to it, creating a global network and embraces operational innovation.

Success in the marketplace today requires much more than innovative products and strong brand identity.

It has recently become increasingly difficult to differentiate business using the 4Ps of marketing – product, price, promotion and place.

Customers are more demanding, products are often easily cloned or imitated and markets have become “commoditised”.

To succeed in our volatile environment, companies need to go beyond the conventional marketing mix and to recognise that competitive advantage is gained through the strength of the relationships that can be forged with key accounts.

The barrier to improving supply chain collaboration to reduce transaction costs are not actually to do with technology locally but rather they are to do with mindset.

There is still reluctance in commerce to work as partners and hence share information across the supply chain.

Given the benefit of supply chain collaboration through shared information, to what extent is commerce prepared to implement these ideas that have capacity to reduce corruption in procurement activities?

Secondly and more important, a stable economic environment characterised by policy consistence and appropriate legal framework is necessary to the success of this idea.

lNyasha Chizu is a fellow of the Chartered Institute of Purchasing and Supply writing in his personal capacity. Feedback: nyashachizu@harleyreed.com

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