5 Ways to Achieve Supply Chain Optimization
By Hugo Britt | July 15, 2021
After witnessing the impact of COVID-19 on supply chains around the globe, let’s take a step back to evaluate lessons learned and analyze how agile supply chains overcome obstacles.
The following are powerful optimization tactics gleaned from supply chain leaders.
Lessons in supply chain optimization
Agility is the catalyst that helps supply chain leaders predict, prepare for, and surmount supply chain obstacles.
L’Oréal is an excellent example of a powerful, agile supply chain, facilitating the distribution of over 6 billion products annually. Francisco Garcia Fornaro, L’Oréal’s Chief Supply Chain Officer wrote, “Agility is the first pillar of our strategy, and in practical terms, it means the ability to respond in real-time to market expectations. Our … planning strategy allows us to predict market volatility and to increase our industrial agility accordingly so that we can provide an optimal service to our customers.”
To determine where innovation is needed, evaluate key performance indicators to find out where problems arise within your supply chain. A primary example is behavior that can disrupt your supply chain like order irregularities that result in product shortages.
Johnson & Johnson is a supply chain leader that sets an example in this area for innovation through real-time data analysis. J&J leverages data science and advanced algorithms to monitor and analyze order patterns from large customers. When any major deviations or unusual patterns are uncovered, an alert is sent to supply chain managers.
Automation technology increases efficiency and enables supply chain scalability. Supply chain giant Walmart is investing in supply chain automation for their distribution centers, eCommerce fulfillment centers and in-market fulfillment centers. Its omnichannel automation strategy encompasses thousands of stores and hundreds of distribution and fulfillment centers.
According to Brett Briggs, an executive vice president at Walmart, “investments [in automation] will enable productivity improvements for years to come.”
4. Artificial Intelligence (AI)
From inventory planning to identifying inefficiencies, the power of AI can both optimize and protect your supply chain. According to Gartner, through 2024, 50% of supply chain organizations will invest in applications that support artificial intelligence and advanced analytics capabilities.
L’Oréal is once again an example of supply chain optimization through a collaboration with Google to build their AI-powered Beauty Tech Data Platform, which leverages AI, compiled data, and algorithms to produce detailed, reliable sales forecasts.
Strong relationships are the catalyst for partnerships that can help you overcome supply chain challenges. Our spotlight shines on Apple’s CEO, Tim Cook, who has been touted for the strong relationships he has built with suppliers. Apple has earned a spot in the Gartner Supply Chain Masters Top 5 list every year since 2011, and part of their success can be attributed to their strong partner relationships.
A letter in Apple’s 2021 Annual Progress Report from Sabih Khan, Senior VP of Operations, mentions that they “worked hand-in-hand with our suppliers to redesign our processes with maximum care for people’s health” during the pandemic.
The report lists 19 organizations and associations they collaborate and partner with to tackle issues that “are bigger than any one company or organization.”
That’s the power of relationships.