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Using Technology To Improve Your Supply Chain Efficiency Is A Smart Move

Using technology to improve your supply chain efficiency is not a new idea, but it is a smart one. A business needs to be able to operate as lean as possible to achieve a higher profit margin because profit generation is the only thing that matters as far as measurements go when trying to diagnose the health of a business.The only exception to this rule is for 5013Cs or nonprofits.They have different measurements beyond income to measure health.

The supply chain is the way that a company puts its product together.It includes purchasing the necessary parts and making sure that a company can meet consumer demand.Before the days of instant communication, this generally meant keeping on hand a warehouse full of parts that were turned into a warehouse full of product that the company hoped would sell based on predictions of consumer needs and desires.While these predictions were disguised as best practices, it often seemed like a Zoltar the fortune teller amusement machine could have done just as well at knowing how much of what consumers would want.As it stood, companies were often left with product standing in the warehouse waiting to be ordered and purchased.

Lean systems came into the world offering businesses the opportunity to have the product pulled through the process rather than pushed.No product was made unless a cue was triggered.Then the process would allow for the creation of a certain number of items to replace what was sold.This process had its difficulties for those items that were suddenly in high demand.The warehouse would run out of product quickly, and the triggers weren’t activated fast enough to meet demand, or worse they were lost or protocols weren’t followed correctly to make sure that the supply could meet demand.
When demand could not be met, customers would move to the next available similar product, or they would just never purchase the product.It is very hard to win back customers, so companies need to work hard to keep the ones that they have.

The reason why this efficiency is so critical to business health is that it cost money to store items on both ends of the process.That means not only the space and the raw materials used in the storage and manufacturing process were taking money out of the company, but it also cost the business in opportunity costs.It is possible that the cash that was sitting in the warehouse in the form of unsold product could be put to a more productive use if it were in its raw form.

Technology can help lean systems be more efficient and responsive to demand.As a product gets pulled through the process, no one has to worry about little cards providing the cue to trigger the creation of more products.Those cues can be automated and sent instantaneously to the correct person.This immediate response allows the factory to rev up production quickly to replace that which has been sold.
All communications now can take place immediately not only within a company, but also to the companies that it works with.Parts can be ordered and sent quickly and depending on the working relationships between the two companies, they can be sent overnight or quicker within certain geographical proximities.

This type of ordering allows everyone to improve customer service across the board.The company making the product gets better served by its suppliers, and the consumer gets better service from the manufacturer who is better able to meet demand.Everyone is happy, and profits go up.

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