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What's most important in creating a supply chain management strategy?

Begin with the end in mind -- great customer service. That's one secret to establishing your supply chain priorities; one that can help as you decide on its tradeoffs.

Any business that serves customers must build its strategy around customer service. For any participant in the...

supply chain -- including producers, distributors, suppliers and service providers -- that means delivering products as ordered and on time.

The second priority is to make the best of your resources to deliver that high level of customer service. That means controlling costs. Any company can deliver whatever a customer wants whenever they want it, given enough inventory staged strategically to be delivered quickly. But that's prohibitively expensive and downright impractical, if not impossible.

So supply chain managers are tasked with using whatever resources are available as effectively as possible to deliver the best service. And that requires an effective supply chain management strategy.

Fundamentals of supply chain management strategy

Breaking that concept down into more concrete terms, warehouses and distribution points must be located close enough to customers to provide the required delivery lead time. Those distribution points must be stocked with the right quantities of the right products to meet the expected demand. Transportation resources must also be efficient and responsive to support reliable, on-time delivery.

Supply chain management isn't easy. There are a lot of factors that go into delivering good customer service, and each of them involves a tradeoff between speed and cost or availability and cost. The most effective supply chain will have higher costs; the most efficient supply chains cannot deliver the same levels of service and responsiveness.

Technology critical to modern supply chain management strategy

Technology offers the best solution to the tradeoff dilemma when creating the right supply chain management strategy. Modern supply chain planning and management software is designed to optimize various factors and resources to deliver the best service at the best cost according to the company's priorities and strategic goals.

And remember that supply chains are never static. Conditions are constantly changing, and even the most stable supply chain situation requires constant adjustment to accommodate changing regulations, currency fluctuations, availability, disruptions, natural disasters and weather patterns, changing customer demand, and more.

Supply chain management software, supported by the rapidly increasing visibility provided by Industrial IoT sensors and networks, is key to doing more with less and continually maintaining and improving supply chain performance.

This was last published in October 2018

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