In today’s variable economy, the need to compete in a world-wide market must become the central focus for small to medium-sized enterprises (SMEs). Over the last few years of speaking with many C-Level executives, it has been quite surprising to discover that most companies do not understand their COR (Cost of Revenues) — specifically how it relates to the supply chain. Most companies appear to be either using an antiquated formula year after year, or a formula that does not address the changes and volatility of the supply chain. Strategically, we will concentrate on one central key to adopt “best practices” in Supply Chain Modeling (SCM) to further clarify COR as it relates to transportation as well as methodology to remain on the cutting-edge in a global marketplace.
Develop processes to ensure efficient and accurate shipping by defining transportation costs per geographic area.
Equip Customer Service with a matrix of transportation costs.
Evaluate Supplier compliance and sustainability with KPI’s or scorecards.
Appraise risk management and overall supplier resources – be prepared to augment.
Consolidate transportation purchasing through RFP, removing spot market instability-optimize vendor pricing programs.
Centralize Distribution Centers to address OTIF & PO Fulfillment.
Quantify operating expense as a percent of gross revenue by SKU (operating expense/revenue) x 100.
Utilize proven programs such as Kaizen or Six Sigma to improve operating processes.
Synchronize inventories for better flexibility.
Envelope Business Intelligence Visibility & Technology for a seamless customer experience (including E Commerce).
Develop Omnichannel distribution through stock management and product positioning.
Cultivate quarterly metrics, and data analytics to report to your key customers.
Evaluate your current web content (review Donald Millers SB7 approach in marketing/sales).
Incentivize your customers to purchase larger quantities to drive down cost per pound and overall ROI.
Review internal sales processes (what worked the last few years, will likely need to be refined).
Invite the Department of Economic Development to your facility for key marketing & cataloging globally.
Operations Economy of Scale
Are there areas of your core business that could be outsourced through managed transportation?
Outsourcing oftentimes provides you with the flexibility to scale your business, distribution, and supply chain channels
Consider outsourced warehousing to manage your supply chain for improved ROI.
With changing customer expectations, & rapid processes, you will need to build and execute strategies to overcome delivery or supply chain challenges.
Business Intelligence, efficiencies, and enhanced methodologies always build value for your customers.
While the bullet points are part of a successful SCM, we are hopeful they will bring further clarity and even produce more creative junctures in your current supply chain. Irrespective of economics, strategic planning, forecasting, and reorganizing current processes will continuously advance your company to the forefront of a global market.
Director, 3PL Solutions