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Supply Chain Analytics that Actually Matter

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Understanding your supply chain is critical to running a successful business. Supply chain analytics refers to the insights and conclusions made from examining your supply chain.

There are specific drivers worth paying attention to. This article touches on four drivers in your supply chain that you need to know.

1. Cost of the Supply Chain

The foundation of knowing your supply chain comes from understanding the numbers. Specifically, how much does it cost to bring your product from inception to the end user?

Calculate all costs in every phase of production. Doing so can inform several decisions, such as:

  •  How much inventory you can afford to keep on hand.
  • Where you can afford to ship your products.
  • How quickly you need to sell your goods to remain cash flow positive.
  • How much stock you will need to fulfill future orders.
  • How long you have until you need to order more supplies or materials.

Thoroughly investigate your supply chain and figure out these numbers. Then, you’ll have a place to start making profit-driven decisions.

2. Customer Service and Satisfaction

It’s no surprise that the way your customers feel about your company affects business. But in what ways does this affect your supply chain? Consider the following:

If a new customer’s order is flawlessly fulfilled when it’s first placed, then you have a good fill rate. Not only does this speak the smooth execution of your supply chain, this fulfillment creates a happy customer.

Continually satisfying customers creates proven return on investment (ROI). Not only are you more likely to generate return business from happy customers, you have a better chance of upselling to them as well.

Of course, things don’t always go as planned. So, now, imagine instead that part of the new customer’s order is missing. Or even worse, they made a purchase and it never arrived. Now, it’s time to fix the mistake with quality customer service.

You might offer the customer a refund and hope they order again in the future. You could also provide a free product to make up for their missed order. Whatever you do, the goal is to right a wrong created somewhere during your supply chain.

Correcting the error may result in additional expenses for the business. But good customer service practices are what retain consumers. A survey published by McKinsey & Company finds that customers are 70% less likely to patronize a business where they had bad customer service.

Furthermore, implementing customer service solutions can help you identify points of failure in your supply chain. Why didn’t the order ship correctly or on time? Where exactly was the mistake made? Answering these questions improves your supply chain and ensures you don’t make the same mistakes repeatedly.

3. Time Spent Throughout the Supply Chain Process

Consider time as a crucial value in the supply chain process. Measure the way you spend time during all points of the chain. Here are a few examples:

  • Lead time: The time it takes to get your product from A to Z. This takes into account the planning and execution of the production process. How long does it take to produce the goods that you sell?
  • Transit time: The different phases of storage and shipment your product goes through. This can also include how long your goods spend in storage. What is the delivery and/or shipping time to the end user?
  • Turnaround time: How long it takes your business to fulfil a customer’s request once it’s submitted. This applies to all aspects of your supply chain, such as the purchase a customer makes or a question they have about your product. What is your response time to fulfilling customer needs?

Look at where time is invested in your business. Analyze these investments and explore ways to create efficiency.

4. The Data You Gather and What You Use It For

It’s all about the data you collect on your customers, finances, and general business proceedings. But it’s just as important how you apply this data.

First, you need to model a problem. Understand the assumptions you’re making about your supply chain. Decide what variables you need to quantify. Set up specific parameters to your goals so you can reach a clear answer.

Try asking yourself questions like these to model your problem:

  • Do you want to maximize profits? What products or services make the most money? What margins do they produce? Will customers pay more? How much more might they pay?
  • Do you want to minimize waste? Where are the biggest losses in your supply chain? Could it be shrinkage? Or is it a production issue?
  • Are you searching for a way to optimize your manufacturing process? Is it a staffing issue? If so, could it be a lack of quality employee training? Or do you need to hire more workers?

Determine the questions you want answered. Apply your data to the problem so you can form and test hypotheses.

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Topics: Metrics Supply Chain