– to easily improve profits with analytics
Your supply chain is probably the most valuable place to take advantage of analytics. Partly because of the complexity, and partly because of the crucial role the supply chain plays in the cost structure- which ultimately controls your company’s profits.
“The competitor that’s best at managing the supply chain is probably going to be the most successful competitor over time. It’s a condition of success.”
Jim Owens, former Chairman & CEO – Caterpillar
1. Control the tail
Your booming product assortment needs strategic trimming frequently. Identify the long tail with numerous low-volume, high-variability and low-margin products. Adjust pricing, minimize resource spend and eliminate cost absorbing products with little strategic significance.
2. Differentiate service levels
Choosing the right service levels across a broad product portfolio is mission critical.
Slow-movers and high-runners with equal service levels affect your business unequally.
Differentiate service levels to increase customer satisfaction and minimize costs.
3. Eliminate excess inventory
Excess inventory is associated with product obsolescence, long lead times, poor forecasting accuracy, quality problems or poor inventory management decisions.
Measure and eliminate your excess and obsolete inventory by analyzing your data.
4. Focus on the core
Do not get trapped in the idea of equality – your products are not equally important. Apply 80/20 Analytics to your workflow and identify the few core products defining your business. Spend a relatively large amount of your management and capital resources to secure best-in-class performance.
5. Align sales and operations
Adopt a demand-driven supply chain strategy by closing the gap between sales and operations. Combine a fact-based perspective with other information sources to get a deeper understanding of upcoming or potential changes in demand.