What is Supply Chain Improvement?

supply chain improvement definition

Supply Chain improvement definition

Supply chain improvement is a set of projects or initiatives implemented to enhance current supply chain management practices. Supply chain improvements include supply chain technology projects, as well as, process optimization initiatives aimed at eliminating waste to create a more streamlined, or efficient supply chain.

Supply Chain Continuous Improvement

Supply chain continuous improvement is a supply chain improvement method that takes the approach of using small, endless efforts to solving existing supply chain problems. This approach is different from using a “big project” supply chain improvement method. It is important to note that, even in big project supply chain improvement initiatives, employing a continuous improvement mentality or process guarantees better-sustained results over the long-haul.

Supply Chain Improvement Goals and Objectives

For any supply chain improvement initiative to succeed it’s essential for the business involved to outline the goals and objectives of the project. Each organization within the supply chain may have different objectives and goals for wanting to improve the supply chain. See chart for Supply Chain improvement goals and objectives for the different organizational functions.

supply chain improvement definition
Function Objective or Goal
Sales and Marketing
  • Increase sales
  • Develop new products
  • Exceed forecasts
  • Maximize Throughput
  • Minimize costs
  • Meet quality objectives
Business Management
  • Meet revenue goals
  • Meet corporate financial commitments
  • Meet price and volume goals
Customer Service
  • Maximize availability
  • Meet every order
  • Minimize complaints
Inventory Management and Distribution
  • Minimize inventory and warehouse costs
  • Control inventory stocks
  • Maximize inventory turns
  • Reduce transportation costs

Main Challenge with Supply Chain Improvement Initiatives

While supply chain improvement initiatives often promise projected cost savings most businesses fail to realize these cost savings sometimes in part due to lack of collaboration between the different functions of the organization. For instance, while the objective of sales and marketing organization is to maximize sales and revenue, the distribution function might be looking to minimize inventory and warehousing costs. These two competing incentives and objectives often prevent the collaborative environment needed to achieve supply chain improvement goals.

Competing supply chain improvement objectives exist as a result of:

  • A lack of a well-articulated strategic plan
  • Lack of understanding of the big picture
  • Lack of communication between organizational functions
  • An acceptance of “That’s the way it is always been done.”
  • “Stovepipe” information systems designed and implemented to support individual departments or functions
  • Management edits at odds with strategic business needs
  • Conflicting performance criteria
  • Lack of understanding of how data is used or impacts other functions

Reasons for Improving Supply Chain Management

Supply Chain Improvement Benefits

Each supply chain improvement initiative can bring on different benefits, depending on the concentration of the project. All the benefits that come from improved demand planning, supply planning, and inventory management are exponentially increased by coordinating these functions to optimize the whole supply chain.

Benefits or Results include:

  • Optimized inventory levels – having the right inventories at the right place, at the right time, leading to lower working capital
  • Reduced manufacturing costs (fewer schedule breaks)
  • Better coordination of logistics and distribution with manufacturing
  • Increased throughput
  • Improved customer service
  • Improved organizational corporation and initiative to improve the bottom line
  • A new management process to optimize business results
supply chain improvement definition

Featured Resource:

Improving Your Supply Chain Where Do You Start?

In improving the supply chain, one of the most difficult steps is knowing how to get started. Too often, a whole host of things seem to be wrong and trying to figure out where or how to begin can be overwhelming. In this simple guide, we’ll outline some supply chain improvement ideas to get you started.

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