DRIVERS OF SUPPLY CHAIN PERFORMANCE

DRIVERS OF SUPPLY CHAIN PERFORMANCE- SCM Blog-02

Driver is The best driver of a supply chain company is to strike a balance between its accountability and efficiency, and always maintain it, which is considered a good strategy for any business. Now it is also needed here so that the cross-functional drivers of the supply chain can be given accountability and get efficiency from them.

There are Six drivers involved in the supply chain, in which this blog will know what is their role in supply chain.

1. Facilities: The first physical facility in the supply chain network is the physical location where the pay product is stored, this location can be of two types, first (production site) and second storage location.

Decisions of location and its capacity and facilities are believed to have a significant impact on the performance of the supply chain, and can also have good and bad effects.

For example, many companies have joined with customers by increasing the number of small storage facilities in many cities rather than one city, i.e. by increasing PP&E (property, plant and equipment), It was impossible at first.

Conversely, many companies have shut down many of their Sarai retail facilities and joined their single facilities to improve their efficiency.

That is to say, there is a supply chain company who tries to increase their performance even by working facilities,
There is also another company that keeps on increasing its facilities for performance.
Now these facilities PP&E can be under any firm or can also be on lease.

 

2. Inventory: of a supply chain includes all types of raw materials and and finished goods. Inventory asset reports are done inside by management and outside form. Changing inventory policies is considered very sensitive, as it can also dramatically change the efficiency and accountability of the supply chain.

For example, one type of company stocks a large amount of inventory to meet customer demand, and makes itself responsive by satisfying customers, although everyone knows high inventory levels reduce efficiency.

While such a practice also counts on the company’s merchandise and customer needs. The strategy of keeping the fashion apparel business inventory high can be dangerous as their value changes with the seasons and trends.

Instead of keeping a high level of inventory, many retailer companies are working hard on new products and customer’s need and delivery speed.

3.Transportation:The transporter moves the inventory from point A to point B in the supply chain. Transport works for different modes and routes with their own performance characteristics: full truck, courier, part load, fast mode, etc. . Choosing transportation options has a major impact on accountability and efficiency for the supply chain.

For example, a supply chain company uses fast mode transport for a product because it wants the best service. Such as making the supply chain of products more responsive, but not considered efficient because fast mode is high cost.

However there are many supply chains that use ground transportation rather than using fast mode, and structure their supply chain by providing next-day service to most of their customers. Meaning they are providing high level of accountability at low cost. You should know that inbound transportation costs are usually included in the cost of goods sold.


4. Information: The information analyzes data related to all types of facilities, inventory, transportation, costs, prices, and customers in the supply chain.

Information is probably the biggest driver of performance in the supply chain and its biggest role. Because if it did not work directly then all other drivers may be affected.

Information presents management not only with the supply chain but also with the opportunity to make any company more sensitive and more efficient.

For example, many companies have used better information, you can match production and distribution supply and demand.

The result is a higher level of accountability for customer demand, while lower costs of production and replenishment.

5. Sourcing: Without will not perform any particular supply chain activity such as production, storage, transportation management.

At the sourcing strategic level, these decisions determine what a firm does, what it wants to do, and what the firm’s sources do, sourcing decisions affect both the accountability and efficiency of the supply chain.

The company should try to make its production facilities very sensitive in high cost locations while keeping their facilities efficient. You need to know that sourcing cost is reflected in the cost of goods sold. And the money given to suppliers is recorded under accounts payable.

6. Pricing : Determines how much a firm should charge or what it will charge for the goods and services it provides in the supply chain. Pricing affects buyer behavior, thus affecting demand and supply chain performance occurring in the supply chain.

For example, if a transportation company differs in its charges based on lead time provided by customers, it is likely that customers with price efficiency will place orders quickly and customers who wait for accountability and transportation of product Will be ready to order just before. .

Pricing provides accountability to customers, customers who value it and lower costs to customers who do not value accountability more.

Any change in pricing directly affects revenue, and other drivers also have an impact on the change.



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