November 30, 2023 | Supply Chain Software
Reducing supply chain expenses while maintaining high customer service levels is a continuing battle. Transportation, inventory, and warehousing costs eat away at profit margins.
However, AI, advanced analytics and optimization techniques make cost control possible and increase supply chain profitability.
AI-powered supply chain software provides the modeling capabilities required to boost efficiencies across your end-to-end operations.
Here are some profit-focused opportunities:
Routing analysis and network design optimization allows you to reduce mileage and handle varied customer requirements at the lowest cost. The software can analyze factors like drop densities and dock wait times to build continuous move routes. Consolidating LTL shipments into fuller FTL trucks saves significantly as well. Optimized transport planning also allows you to take advantage of backhauling opportunities and model tradeoffs between cost, timeliness and sustainability. Ultimately, putting powerful algorithms behind shipping plans saves hard dollars.
Balancing working capital requirements and inventory risk are tricky. Supply chain optimization provides the needed analytical perspective for positioning stock across distribution networks. Demand sensing gives you visibility into trends and fluctuations, while inventory optimization models determine adequate levels and locations based on variability, lead times and customer service targets. The result is cost efficiency with high fill rates. Variables like throughput requirements, replenishment frequencies and storage restrictions are incorporated to right-size each location and SKU.
Significant cost factors hide within manufacturing operations like production scheduling, sequencing and changeovers. Optimization helps sequence jobs to reduce setbacks while accommodating constraints. This allows you to maximize throughput with existing capacity. Applying optimization enables operations to save substantially on productivity through smarter planning.
Making strategic sourcing decisions requires weighing factors like cost, quality, reliability, technology capacity, and geographic proximity for multiple supplier options. Supply chain optimization software can incorporate these variables into models that compare suppliers on a standardized scorecard. This allows you to identify partners that balance cost competitiveness with the ability to consistently deliver value. Algorithms even support contract optimizations to negotiate ideal pricing and terms. Harnessing data and analytics lead to better supplier choices that create value.
Traditional supply chain decisions often focus on immediate cost metrics and performance.
However, optimization considers the total lifecycle costs and long-term network sustainability. As supply chains globalize and products become more complex, this future-proof perspective is essential. By simulating the impact of solutions over extended timeframes, supply chain organizations can determine optimal locations, capacities, and inventory positioning strategies that balance financial, operational and environmental costs. This allows you to implement creative supply chain strategies that keep costs low while needs evolve.
Achieving supply chain profitability requires reducing operational costs while maintaining high customer service. Transportation, inventory, manufacturing, sourcing and strategic planning decisions all impact the bottom line. Thankfully, advancements in analytics and optimization modeling put previously out-of-reach cost savings within reach.
By turning complex data into intelligence, supply chain software provides the insights required to boost efficiencies across the end-to-end supply chain. The algorithms available today allow organizations to find creative solutions that were previously too labor-intensive to identify. The outcomes enable companies to offer competitive pricing to customers while achieving financial performance goals. While cost pressures will continue, supply chain optimization technology provides a path towards profitability.
Here’s how GEP can optimize your supply chain.