What is Supply Chain Optimization? Benefits?

FreightOptics Knowledge Center

Supply chain optimization is an intelligent and smart application of the different processes, techniques and tools that ensure the proper operation of manufacturing and distribution in a supply chain. Supply chain optimization includes the best placement of inventory within the supply chain and minimizes costs such as manufacturing, transportation and distribution expenses. Professional freight optimization involves the application of a mathematical modeling technique using software.

Supply chain optimization maximizes the profitable operation of a manufacturing and distribution supply chain. The optimization technique may use measures such as maximizing gross margin return on inventory invested (GMROII), minimizing total operating expenses, such as transportation, inventory and manufacturing, and maximizing gross profit of products distributed throughout the supply chain.

Professional freight optimization addresses the general supply chain problem of how to deliver to customers at a lower cost and higher profit. This includes trading off the cost of inventory, transportation, distribution and manufacturing. Performing professional freight optimization with precise product or package sizes is the easiest and most cost effective way to save money in product distribution.

Supply chain optimization consists of a series of steps that reduce costs during the production of goods. Supply chain optimization, nowadays, is met with new challenges and uses modern software and cloud computing to have a greater impact. It helps for expanding your business and making your supply chain strong. For a business to have a proper data collection process within the supply chain, many different software options can be used. The software will properly maintain the records of all the sales details which is useful for successful supply chain optimization.

There are many advantages to supply chain optimization. Freight optimization services and supply chain optimization are proven credible. Many organizations have benefitted as a result of the use of different supply chain models. Freight optimization services are also commercially effective. Many companies have published case studies to show how clients have achieved measurable results, such as reduced inventory and lower costs, through optimization.

Another supply chain optimization factor is direct plant shipment, wherein the product is delivered directly to the customer, thus decreasing transportation and storage costs. Direct shipment can be essential and quite effective.

Who needs it?

For a business to be successful, it is very important to have a data collection process. Data collection can now be done using a comprehensive software solution. This process maintains a proper record of sales, which is necessary for better supply chain optimization.

Supply chain optimization is great for companies that want to track business activity and have a better understanding of the following:

Sales

With supply chain optimization, one can clearly and properly maintain a record of sales activity, and also see the amount and type of projected future sales. Also, sales records can be compared with the external factors that affect the businesses in order to get a proper projection.

Distribution

The distribution network of the supply chain influences several factors, from sales to delivery. Supply chain optimization ensures the process of manufacturing and delivery works smoothly, reducing time and extra expenses.

Delivery Routes

Monitoring delivery routes can help to establish the most effective routes, saving time and extra expenses.

Price

By observing customer trends, a business can better predict future sales and establish a great sales strategy with better pricing methodologies.

Information

An information conduit allows a business to share and track data with clients and customers. With all the data in place, one can establish the most effective method of doing business.

Our Process

FreightOptics supply chain optimization includes the following:

Redistribution value chain modeling (R-VCM)

With redistribution, manufacturers and vendors can efficiently ship truckloads to redistributors, who in turn ship the full truckloads of products to the distributors. This model leads to optimized supplier production, lower distributor safety stock, and increased inventory turns, resulting in a more efficient, cost-effective supply chain overall.

Data gathering for analysis

  • Review the supply chain network to understand business goals and objectives.
  • Prepare a network data download of qualified products for analysis.
  • Analyze data, including: vendor, product, distributor, demand, order history, temperature, freight method, weight category, case size, and more.

Optimization and cost comparison analysis

  • Complete an Optimization and/or Cost Comparison Analysis of qualified SKUs to determine stocking and delivery strategies to drive costs out of the system.
  • Provide performance recommendations to improve profitability.
  • Submit a Supply Chain Optimization Plan, revealing supply chain cost efficiencies and savings.

Implement new strategies

  • Maximize cost savings by seamlessly transitioning product movement to/from central distribution centers, regional distribution centers, forward-warehouses and redistribution locations.
  • Launch inventory, redistribution and freight logistics solutions to reduce costs.
  • Deliver redistribution products to distribution centers within 30 to 60 days of contract.

Learn more about the following topics:

Freight Contract
Shipping Contract
Carrier Contract
Freight Claim & Shipping Claim
GSR Refund
Lost Package Refund
Damaged Package Refund
Shipping Analytics
Shipping Cost Reduction & Savings
Small Parcel Audit