2 Significant Benefits of a Networked Supply Chain

Posted by Martin Verwijmeren on Feb 21, 2018 8:02:00 AM

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Supply chain networks are the future and we’re not the only ones speaking about it. Multi-Enterprise Business Networks are becoming a hot topic for analyst firms such as Gartner and many solutions are touting their network of partners and suppliers.

However, as we’ve discussed before, our supply chain networks size isn’t as important as what you can truly do with the parties in your network. Today, we’d like to take a look at what a networked supply chain means and the two areas that provides considerable value when you can strategically use your network for better decision making and operational efficiency.

pexels-photo-167259Thinking About Inventory from a Networked Perspective

Inventory is always one of the trickiest costs in supply chain. Have too much and you’re wasting money on storage and entertaining the potential impact of obsolescence of these goods. Have too little and you face the possibility of missed sales with potential prospects and current customers heading elsewhere with competitors that can serve their needs today and potentially the future. Inventory is always a balancing act and the rigid nature of our supply chains often means that we need to carry safety stock in many of our locations to serve the various geographic areas that we serve.

However, what happens when we connect the inventory across our network and make it available to fulfill all geographic areas? This is what supply chain orchestration can help with.

While the majority of the inventory you use to fulfill orders will come from your closest warehouse locations (either owned or outsourced), supply chain orchestration can help in the moments where it’s advantageous to leverage inventory in other ways. Take for instance:

  • When your local warehouse is out of stock of crucial inventory for it’s customers. Instead of putting “Out of Stock” on your e-commerce webshop, supply chain orchestration can help you determine the most cost efficient way to satisfy the order from your networked inventory locations to that customer while you restock that inventory location.
  • When one of your warehouses gets low on inventory of a given product, you can also manage your freight forwarding to most effectively ship inventory between warehouses by better understanding demand and current networked inventory levels.

Inventory continues to be a key factor in supply chain success and networked inventory can help you be agile to satisfy today’s individual customer needs with the future planning adjustments to best fulfill ongoing customer needs.

Consolidation of Carriers for Better Purchasing Power

One aspect of global supply chains we see a lot is the separation of supply chains by geographic region with little synergy within supply chain operations. This is done because each region has its unique supply chain challenges and needs but often limits our efficiency across our entire supply chain operation.

Supply chain orchestration can help to ensure compliance with local supply chain requirements while helping to create synergy with operations for more strategic planning and execution.

One example is in the negotiations with carriers. We partner with a large global 3PL who has connected what were once regionalized supply chains into a single supply chain network for their customers. While this has helped them be more nimble and agile for customer requirements, it’s also helped them greatly reduce their spend on carriers. With the regionalized supply chains, they had relationships with carriers for each specific region that were negotiated separately, with many regions using similar carriers. With a networked supply chain, they’ve been able to consolidate their overall carrier relationships greatly and have negotiated quantity discounts across all of their regions that save them millions of dollars a year.

Is your Supply Chain Networked?

A networked supply chain is the path to the future. As buying patterns continually shift and our business models change on a dime, we need ways to better leverage all the parties and assets in our multi-party supply chain as possible. Supply chain orchestration solutions such as supply chain control towers can help to drive real value across your networked supply chain, enabling you to be smarter in the real-time decision making and execution of every order to ensure the best possible customer experience.

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Topics: Multi-Enterprise Business Networks, Supply Chain Orchestration, Inventory Management, Supply Chain Agility

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