Improving Efficiency in U.S. Supply Chains Through Process Optimization

Regardless of how effective your supply chain is, you should continually look for methods to improve it.  However, understanding how to improve and optimize your supply chain can be difficult for both new brands and experienced ecommerce firms.   In this article, you'll learn best practices for increasing supply chain efficiency and how a third-party logistics (3PL) partner like ShipBob can help.  What is the definition of supply chain efficiency? Supply chain efficiency refers to a company's ability to leverage its resources, technology, and expertise to reduce logistics costs while increasing profits. An effective supply chain aims to save money while increasing revenues by streamlining the supply chain's operations and phases. What's the difference between supply chain efficiency and effectiveness Supply chain efficiency is described as an organization's internal performance benchmark, whereas supply chain effectiveness is the external performance standard.  In other words, supply chain effectiveness focuses on meeting the demands of organizations outside of your firm, whereas supply chain efficiency refers to achieving those demands as fast and cost-effectively as possible.

What is the definition of supply chain responsiveness?

Supply chain responsiveness is the capacity to react swiftly to unexpected events in the environment that affect your logistical activities.  Examples include the ability to scale up when the COVID-19 pandemic struck (i.e., meeting demand for more than double the number of typical online orders when lockdowns were implemented), or getting inventory shipped quickly during a period when some of the world's busiest ports were completely overloaded with container ship traffic. Elements of a responsive supply chai What differentiates normal supply chains from responsive supply chains? While some may claim that responsive supply chains rely on chance, there is a lot more that goes into them behind the scenes, from diversifying suppliers and carriers to installing linked technology that allows for real-time tracking across the supply chain. A responsive supply chain is built on flexibility, which means not only reacting to changes but also taking proactive steps. The aims of a responsive supply chain are: Meeting client demand (delivering on schedule and within the projected cost) Being ability to scale up or down when demand forecasting fails Managing costs during turbulent periods Continuously developing procedures and workflows to meet current needs and situations. Reducing risk by diversifying, planning, and forming the right partnershipsSeveral essential stakeholders (and often third parties) are involved in ensuring that a responsive supply chain functions smoothly, including: Your company's leaders Your manufacturers and suppliers. Your fulfillment centers and third-party logistics Your tech providers Your shipping carriers Your customers. All of these stakeholders must be responsive communicators, with communication flowing both ways. Efficient versus responsive supply chains Supply chain efficiency focuses on accomplishing more with less, whereas supply chain responsiveness focuses on agility and keeping the business running when things don't go as planned. 

But, in reality, supply chain efficiency and responsiveness work together to manage continual chaos, as supply chains are among the most volatile and fragile aspects of business. 

At the end of the day, what matters is a unified supply chain that can move rapidly and adapt without losing money. On-time fulfillment, profit margins, delivery speeds, lead times, and other metrics are all standard indicators of efficient and responsive supply chains. They share the same end goal of achieving client expectations. State of Ecommerce Fulfillment Report Our annual report will show you how you compare to thousands of other ecommerce firms. 3pl How to enhance supply chain efficiency in seven steps Whether you've just started your ecommerce business or it's already established, increasing supply chain efficiency can seem like a daunting endeavor. If you're not sure where to begin, here are seven measures to improve supply chain efficiency: The first step in enhancing supply chain efficiency is to gain more visibility into logistical operations. The easiest way to accomplish this is to develop inventory management systems that enable you and your team to track inventory levels as they progress through the processes of receiving, warehousing, packing, picking, and shipping to customers.  A modern inventory management software (IMS) can provide increased visibility and real-time inventory tracking, allowing you to minimize stockouts, backorders, and overpaying for carrying expenses. By installing an IMS, you gain access to data and analytics that can help you make informed business decisions, such as inventory forecasting.  Communication with your vendors is essential! When you have an excellent relationship with your suppliers, you can plan more effectively and minimize shortages, delays, and problems early on. A dependable supplier is in charge of tracking the work-in-process inventory phase (the flow of raw materials being processed into completed items), which affects the quality of the products you sell and the speed with which you can receive additional inventory.

Warehouse automation lowers the time, effort, and errors that occur frequently in logistics.

Some business owners even use their own technologies and tools to automate logistics in their warehouses. However, because automation technology, equipment, and robotics can be expensive, many ecommerce businesses rely on a tech-savvy 3PL that has invested in automation to streamline their supply chain. This allows organizations to invest more in product development, marketing, and other critical initiatives. Implement supply chain software. With so many operations running concurrently across your supply chain, it's critical to employ the correct software and technology to help your team work as efficiently as possible.  If you manage warehouse inventory in many locations, you should consider adopting a warehouse management system (WMS) that integrates with your IMS. This will allow you to automate order processing, receive real-time inventory tracking, order management tools, and data reporting and analytics. Of course, creating a comprehensive IT stack can be pricey. Fortunately, many direct-to-consumer (DTC) firms collaborate with a 3PL that already has the technology to improve supply chain efficiency. ShipBob's fulfillment centers, for example, are driven by a proprietary tech stack, which includes a WMS that keeps you informed of what's going on in each fulfillment center where you have inventory and where your products are at all times Develop supply chain expertise. Once you've decided to make all of the changes listed above, the next step is to develop a training plan for your staff.  Remember that your supply chain is only as efficient as the people who run it. Warehouse associates, order fillers, and logistics managers should all be taught in standard operating procedures to ensure uniformity, efficiency, and accuracy in decision-making.   If an employee has been with the organization for a long time, request suggestions on how your warehouse team can improve operations. If you don't have a logistics team, a third-party logistics provider can provide the experience required to manage your supply chain.