Supply chain management metrics are designed to give your company the analytical tools to assess the performance of each piece of the supply chain. The matrices should be straightforward to use, but aligned to specific business requirements. Three important matrices critical to effective supply chain management and bottom lines are: carrying cost of inventory, inventory to sales ratio, and inventory turnover.
Carrying Cost of Inventory
The carrying cost of inventory is one of the supply chain management metrics that measures the costs of keeping inventory, whether over the short- or long-term. Carrying cost of inventory can help you to determine expected profits on current inventory, and if more product, or less, is required to ensure income levels or to cover expenses. It can also impact more strategic decision-making like sourcing. Continue reading →
Studies show that the supply chain accounts for over half of the total cost of production. Successful management of the supply chain therefore requires the ability of a company to recover quickly from disruptions. The supply chain is even more complex than it was two decades ago so it is critical that you remain vigilant, steer clear of common mistakes and appreciate the benefits of proactive management.
That said, here are 5 common mistakes in modern-day supply chain management;
1. Prioritizing functions by spend
Quantifying by spend is probably the most common mistake in supply chain management. Simply put, you look at your suppliers and prioritize functions based on who supplies most of your goods and services. So, even if you have 20 suppliers, you’ll want to prioritize say five suppliers whom you’ve always spent 80 percent of your budget on. This strategy worked well until fifteen years ago when outsourcing was proliferated. Today, supply chains come in layers where you source from several suppliers.
You can no longer rely on a single source for your parts otherwise these parts would become a single point of failure in the supply chain. Continue reading →
For businesses that transport their products within North America and carriers, protecting their bottom line from volatile fuel prices is an ongoing concern. One way to garner some protection from a fluctuating fuel price is the fuel surcharge.
What is Fuel Surcharge?
The fuel surcharge is the total cost for fuel usage. It is a contract between the shipper and another party that sets a standard rate for the fuel and how much will be paid above the base rate, and what fuel price triggers the surcharge, or no surcharge at all. Continue reading →
Although there are many industries that can benefit from transportation management, one industry where it is critical is the food and dairy industry. Whether a farm, packager, or seller the process of bringing food and milk to market is a complex endeavor with numerous factors to take into consideration on a daily basis. With so many moving parts, attempting movement and transportation without sound logistics planning in place can be a disaster waiting to happen.
There are few industries that are as time-sensitive as food and dairy production and distribution. You can have thousands of tons of perishable material moving nationwide at any given moment. Some runs can be hundreds or even thousands of miles between producer and consumer. Professional transportation management is the only way to keep the entire enterprise cost effective and therefore profitable.
One solution to the transportation management dilemma is engaging the services of a third party logistics company to provide comprehensive transportation management services. There are four big ways that transportation management services can help your food or dairy business be more efficient: Continue reading →
Poor materials logistics costs the construction industry more than $2 billion dollars every year. Too often, logistics in the construction industry revolve around on-site handling which is usually too little to impact on the total cost of completing projects.
According to Liker, a famous philosopher, waste is defined as the opposite of value where value is any process that a customer is willing to pay for. Waste is also used in reference to resources that add negligible or no value to the final product. Waste is therefore loss of resources including time, materials, equipment, labor and capital, when these resources are produced by activities that contribute to the final cost but do not add value to the final product.
In the construction industry, after the design is agreed upon, most of the value adding usually occurs at the site. Activities that add value are assembly, packaging and finishing. Other activities such as moving, counting, storing, scheduling and sorting can therefore be said to be wasteful.
Unfortunately, research blames the supply chain for most of the wastes in the construction industry. One report went as far as saying that wastes in the construction industry are mainly caused by “obsolete, myopic control” of the supply chain. Continue reading →
There are some industries in which the benefits of third party logistics services are quite obvious, and then there are those companies where the opportunities may not be quite so apparent. We’ve compiled a list of some of the obvious and some of the not-so-obvious industries that can benefit from third party logistics services. Continue reading →
There are many factors that have driven and continue to drive companies to source operations to Mexico. This increase in trading operations involves an increase in shipping from Canada to Mexico. While the process itself is not as challenging as you may think, there are several key factors to be considered for successful cross-border shipping to Mexico: Continue reading →
One of the most important parts of running a business that deals with physical goods is inventory management. Having a critical role in the supply chain, it determines the overall costs, losses and profit margins. A well-managed inventory ensures the smooth inflow of raw material and outflow of finished products, which is essential for the success of any business. But when inventory becomes too large or complicated and starts taking a huge amount of time and resources, many businesses turn to supply chain consultants for help. Continue reading →
Moving goods from one location to another is never free. You will need packing materials, movers (workers), drivers, vehicles (trucks) and possibly storage facilities. The greater the load and the longer the distance, the higher the cost.
But weight and distance are not the only two factors that affect transportation costs. There are several other factors that have a significant impact on the cost of transportation. The following are some of the important factors: Continue reading →
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