Supply Chain Planning and Optimization involves meeting or exceeding the demands and expectations of customers at the lowest possible operating cost. While this is the case, there are other organizations that have transferred to a facility network that is of a higher cost in order to provide customers with the best service possible. This is a growing trend to switch a big distribution center in favor of smaller distribution centers at strategic locations near organizations and customers.
The main logistic cost drivers are information, facilities, inventory, and transportation. With shorter delivery times, information costs becomes much more important. In the case of delivery times being short, it is crucial to monitor the shipment information in order to permit some adjustments and tweaking to the mode of transportation and the carriers. This can increase the running cost of the information system, on both the hardware and the software. Many companies hold a backup safety inventory or stock level for the same product at their distribution centers.
Businesses should always treat quality supply chain planning process in the same manner as purchasing high end insurance where they will just rely on the insurance to protect them from any unplanned circumstances that might pop up down the line.
Sadly most companies and organizations tend to neglect the importance of supply chain planning and only look back into it when something goes wrong. A lot of companies in fact devote more of their man power and resources on the sales and finance teams while under compensating the supply chain department. It might seem that the supply chain planning team is often times seen as the third leg of the organizational tripod that makes the organization or company successful.
Companies usually don’t have people working on the sales forecasting or making the demand plan. Supply chain planning is pretty much the classic case of being quite right and not precisely wrong. Meaning companies with great supply chain planning processes and systems in place are the companies who succeed in this economy.
Because in order for companies to get in phase with the ever changing supply and demand data and factors that relates to supply chains, they need to have a great planning department that oversees and considers all the cause and effect relationships and the domino effect between millions of collected in a flash. Doesn’t it make sense that it is intuitive to have a company or organizations with great supply chain planning teams and systems in place in order for them to know what to plan for and what financial turbulence to prepare for? So it is highly important that companies should invest more resources and man power in this department.
In summary, just like insurance with supply chain planning, you get what you paid for. Its best to consult with companies that deal with supply chain planning to ensure that your company has a well planned supply chain. Saving you money in the long run as well as meeting or even exceed the expectations of your customers.