The design of an effective supply chain network is an essential part of any supplier’s business strategy. All aspects of this design are important and must be monitored and adjusted at each and every opportunity to ensure an optimized network. How do you know if your supply chain is no longer efficient? Millennium Logistics Management is happy to provide 3 sure signs your supply chain is inefficient.
Finding problem areas can be challenging. When you first attempt to determine where the problem begins, it may seem too complicated and even overwhelming. Don’t get discouraged! There are some relevant metrics you can use to help you see how your supply chain is performing at a glance, let’s explore these 3 signs that may indicate your supply chain network is inefficient:
A poorly managed inventory can cause supply chain design problems and this could lead to unexpectedly running out of inventory which means you then have to fall back on your backup distribution center. If this is occurring often, it will seriously damage your percentage and delivery day radius. If you do not have the proper safety stock levels to meet your service level needs, it would be wise to focus on the internal management of your inventory.
In the logistics industry, miles per delivery (or MPD) is a fairly common metric and there are certain numbers you want to be hitting when benchmarking your MPD. Your miles per delivery is a great way to conclude if there is a general optimization problem with your supply chain. Ultimately, you want to keep your miles per delivery under control or it can have an underlying effect that distorts other metrics.
Ideally, you want your miles per delivery to be between 150 and 300. Anything between the range of 550-1,000 is an indication that there is an issue (it usually means you are practically moving halfway across the country to make deliveries).
Each of your clients provides very useful information that will help you establish a baseline using a map. This allows you to plot your company’s shipping information on a yearly basis which you can use to re-create the routes used on a map with point to point lines between the distribution center and the customers.
If you map looks like a spider web (or worse), it is a clear indication that there are obvious issues which means there is room for optimization. This result could be derived from inventory levels driving the use of backup distribution centers or a lack of distribution centers altogether.
An optimized network is very much centralized around distribution centers. This map will look more like a cluster diagram, with routes shooting out from different cities and will be much more organized, allowing you to see the most effective routes clearly.
Your supply chain network is a complex system that is constantly evolving, but if you see any of these signs, there is room for improvement. From distribution centers to delivery routes and the time in between deliveries are all part of your network and understanding that network can significantly determine the difference between experiencing great profit losses and savings tens of thousands of dollars. Millennium Logistics Management has been providing corporations with the logistical expertise, guidance and solutions to establish programs that produce major savings. Find out how we can help you by contacting us today!
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