Everything You Need to Know About Supply Chain Optimization

Growing demand in e-commerce and online services has revealed the need for many businesses to reconsider how they manage their supply chain. The increase in demand for products, the need for greater flexibility and the willingness to provide high-level customer service have led businesses to turn to supply chain optimization.

Supply chain optimization allows companies to maintain their competitive advantage in the market, reduce supply costs and avoid fragmented supply chain management. In this article, we explain how supply chain optimization helps companies improve their management, improve customer satisfaction and how to build effective supply chain management (SCM) systems.

What is supply chain optimization?

Supply Chain Optimization (SCO) is a powerful strategy implemented by many businesses to reduce manufacturing and operating expenses, as well as improve the overall performance and efficiency of the supply chain.

Businesses choose SCO when they want to improve their financial results, for example balancing shipping costs with product requirements or when they go through a business merger or acquisition process when two businesses need to align the workflow of their supply chain with each other.

SCO is a complicated process and usually involves several steps:

  • Supply chain design – When the company builds and manages the supply chain so that it can find the most optimal balance between the production, storage and transportation costs of the product;
  • Supply chain design – Involves detailed planning of the delivery of the material to the point of production and a final journey of the product to the customer;
  • Execution of the supply chain – When a company utilizes the available assets in the best way, effectively controls costs and manages to deliver the right items to its customers on time.

Solid software solutions significantly facilitate the process of streamlining the supply chain. This is why before starting their SCO, many businesses turn to a careful selection of supply chain apps. In many cases, businesses prefer to build software solutions for their supply chain. This allows them to precisely tailor the software to the needs of the company, ensure detailed supply chain analysis, and gain important insights about possible improvements as well as expand the software effectively in line with business development.

The benefits of supply chain optimization

With supply chain optimization businesses can achieve better work capacity and improve their customer satisfaction. An efficiently designed SCO process helps businesses:

  • Reduce silos Strictly optimized supply chains have improved visibility and better data exchange; As a result, it enables many business partners involved in the supply chain to better track product or raw material journeys, timely address any inventory shortages, better anticipate possible inventory or under-inventory challenges, and reduce risks;
  • Lower operating costs – SCO enables businesses to improve their logistical operations, while accurately performing the workflow of the supply chain and provides the opportunity to find the lowest cost of transportation, storage, manufacturing of products and other services;
  • To better address customer needs In conditions of on-demand economics when customer expectations are high, companies try to provide the best service to retain their buyers; Streamlining their supply chain helps companies provide their customers with a fast delivery of products and quickly address customer-raised issues;
  • Gain a competitive advantage in the market – With advanced supply chains businesses are focusing more on making a supply chain instead of designing a supply chain network; As a result, companies can make real-time decisions and better plan their future business strategies;
  • Improve supply chain agility – Well-tailored supply chains can better respond to the daily business challenges associated with high / low customer requirements, supply distribution, market fluctuations and others;
  • Facilitate many supply chain processes – SCO software helps businesses perform complex tasks in the supply chain processes, such as joining vendors and collaborating, accelerating delivery time, solving customer problems and more.

The Challenges of Supply Chain Optimization

There are a variety of challenges that companies face when choosing an SCO. Although, according to the latest SpendEdge presentation, If companies succeed in the optimization process successfully, they can reduce the company’s expenses by 10% to 40% and significantly improve their decision making.

Major SCO issues include location, manufacturing and inventory accuracy. Let’s take a closer look at them and possible solutions.

It is vital for the company to consider where to locate its manufacturing plants, distribution warehouses and warehouse facilities. Many companies are positioning themselves closer to their end users while building their production closer to the source of the raw material. It is essential for companies to correctly analyze market requirements and correctly identify where to locate, given the regulatory standards of the areas in which they want to launch their branches.

Deciding how many items a company needs to produce to meet market demand is one of SCO’s most common problems today. Besides, businesses need to consider the quality of the goods they produce. Therefore, companies need to perform a careful market analysis and research the costs of the alternative products and the demand in the market. Moreover, they have to make many operational decisions related to workload scheduling, equipment maintenance, product quality assessment, outsourcing of production if necessary and more.

On average, inventory management costs reach 20-40% of their value. Therefore, for efficient supply chain work, businesses need to accurately track their inventory levels and ensure their delivery on time. For this businesses need efficient warehouse management software that can maintain an optimal inventory level.

All of these issues can be addressed effectively through well-thought-out digital solutions that feature advanced analytical tools, provide high data visibility among departments and business partners, and offer convenient inventory management tools.

SCAND Recommended Methods for Supply Chain Optimization

One of the most effective ways to optimize supply chains is to develop custom supply chain management software based on cloud infrastructure. While custom software development offers solutions tailored to the needs of a particular business, a cloud infrastructure makes it sustainable, simple to expand, easy to access for various business participants and extremely secure.

SCAND has extensive experience in building powerful and efficient solutions for custom supply chain management, including those that have a core cloud infrastructure.

Software developers at SCAND have experience working with Amazon AWS, Google Cloud and Microsoft Azure.

Supply chain optimization

For Google Cloud we use:

  • IAM for managing users / roles;
  • IAP for resource access management;
  • Armor for protecting application entry points;
  • Google monitoring – for collecting logs from containers (not for all projects);
  • Kubernetes engine (RBAC, Container-Optimized OS) for orchestration and automatic scaling of containers;
  • KMS for managing keys / secrets;
  • GSuite for managing Google and MFA accounts;
  • Cloud SQL – MySQL / PostgreSQL depends on the needs of the project;
  • VPC Network Peering – private connectivity Access to VPC networks;
  • Firewall Rules – Manage firewall rules between VPCs, based on network tags;
  • Service Accounts – Helps manage permissions for applications / VMs instead of a single end user;
  • reCAPTCHA – to block automatic hacking;
  • Compute Engine for managing individual instances;
  • Memorystore (Redis) for fast storage;
  • Load balancing – for balancing incoming requests and performing simple protection operations;
  • NAT to regulate access from external systems;
  • Registration of containers for managing his own belongings;
  • Building a cloud to perform objects;
  • Google Storage – for storing assets and static files;
  • Pub / Sub – High efficiency MQ broker.

For AWS we use:

  • AWS IAM for user / role management;
  • AWS EC2: instances, VPC, elastic load balancing, security groups etc;
  • AWS Glacier for archives;
  • AWS S3, S3 Glacier – long-term base storage;
  • AWS EKS – Management of Kubernetes or creation of a Kubernetes cluster for customers in EC2 using EC2 Spot Instances to reduce system cost;
  • Registration of elastic containers, service of elastic containers – work with containers;
  • AWS Lambda – Assimilation of service tasks and event processing that initiated AWS shows;
  • AWS SNS – for messaging purposes;
  • SES, WorkMail for working with emails;
  • RDS, DynamoDB, ElastiCache – for data storage;
  • AWS Memcached – For caching purposes.

For Azure we use:

  • Azure Active Directory – enterprise authentication;
  • Virtual machines for managing individual shows;
  • Kubernetes service – for managing Kubernetes clusters;
  • Virtual Networks – for creating private networks;
  • Resource group – consolidation of several resources;
  • Storage account, disk storage – for data storage;
  • Network interface – for communication communication services;
  • Network security group – to maintain security rules and traffic control.

In addition, for additional maintenance, monitoring and security, SCAND developers use the following tools:

  • OSS and Falco for intrusion detection;
  • Terraform and Ansible for application management and deployment;
  • Jenkins, Bitbucket Construction Pipe;
  • ELK / TIC / Prometheus and Graphana for monitoring.

Geographical locations depend on areas of interest in the project. If the matter is in one geographical area, the production environment should be located to access it quickly from different destination areas. Or special techniques (like VPC Network Peering) should be used to ensure fast access between different parts of the environment.

The SCAND team uses the most efficient locations to place their production environments around the world, including:

Supply chain optimization

Summary

Supply chain optimization is an effective strategy that enables businesses to remain stable in the market, provide quality customer service and minimize operating costs. Although SCO is quite complex and includes a variety of changes at every stage of supply chain management, companies are able to significantly reduce expenses and improve decision making after making changes.

The key components to an effective SCO are well-chosen software and infrastructure. This is why many businesses prefer to build their own supply chain management software based on cloud services. SCAND has 20+ experience in the software development market and has already provided a wide range of SCM solutions, including order management software, purchasing management systems, supply chain enterprise applications, delivery service platforms, field service applications, inventory management systems and more. others. For more information, see our portfolio.

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