Building a Segmented Supply Chain

A vast majority of companies, particularly those with thousands of SKUs and diverse product lines, believe it’s critical to tailor their supply chain processes to the goods they sell – in other words, segmenting their supply chains according to need – to address these issues.

However, effectively and cost efficiently segmenting global supply chains requires systems to automate key processes, which allows companies to perform complex and time-consuming tasks that would be impossible to do manually. Here are four areas where you can benefit from automation to segment your complex, multidimensional and global supply chains and improve end-to-end supply chain processes, control costs, and predict and meet customer demand.

1. Optimize sourcing and distribution
To truly optimize sourcing and distribution you need to be able to easily compare total landed costs for sourcing from and distributing to multiple destinations – with full visibility into all associated costs and regulations. In addition, you also need to take into account embargoes, prohibitions and license requirements, as well as product-specific barriers to importing and exporting. By simultaneously comparing purchasing, logistics and distribution information you’ll be able to make faster, better-informed sourcing decisions as well as identify preferential trade agreement opportunities.

2. Improve order fulfillment processes
The ability to enter information into the system once and share it across multiple parties in the shipping cycle dramatically reduces errors and speeds order fulfillment. Importantly, it enables you to achieve greater supply chain visibility, allowing you to identify operational bottlenecks; eliminate excess inventory; minimize expedited shipments; and improve customer service. According to an AberdeenGroup report, a U.S.-based consumer packaged goods company’s use of a supply chain visibility solution reduced its number of days of inventory in hand by 24 percent; reduced lead times by 28 percent and improved on-time customer delivery from 33 to 74 percent.

3. Create stronger supplier management practices
As companies re-engineer supply chains and shift production to contract manufacturers overseas, they often lose control over the integration of the procurement process with the import compliance program. Extending a compliant purchase order process to suppliers allows you to streamline the import supply chain and better manage a global supply base; as well as and analyze compliance metrics to improve operations.

4. Lower international transportation costs
A survey by AberdeenGroup identified that higher than expected transportation expenses were a large factor in landed cost budget variances and that most importers do not have a formal solution to manage international transportation. Yet the logistics costs associated with operating a global supply chain can be 6 to 11 percent of revenue, roughly 3 - 5 times more than a domestic supply network. Companies need an international transportation system that can streamline complex freight calculations to avoid rating misquotes and carrier overcharges. With the right tools, you can lower costs, optimize carrier selection; improve carrier performance; and audit and correctly pay freight bills-of-lading.

Best-in-class organizations are starting to make technology investments to facilitate the key requirements for building a segmented supply chain including sourcing and procurement, inventory optimization, warehouse management, transportation management and supply chain analytical solutions.