While many organizations have some flexibility built into supply chains , such as adjusting to common forecast areas , other parameters can change rapidly . Global supply , e-commerce , and quick fulfillment have made supply chains more susceptible to shocks . Fixed networks allow companies to ensure the lowest cost of distributing items – and while cost is still a high priority – they don ’ t necessarily help manage uncertainty .
However , when businesses deploy continuous design practices , they are designing their entire supply chain network . This includes production , logistics , and suppliers ( building in optionality ) to withstand disruptions . As a result of upstream resilience , the last-mile will benefit from the trickle-down effects .
Continuous design is only possible with the adoption of new technologies . For example , a digital supply chain twin replicates the physical supply chain with all the nodes and flows so companies can test scenarios and evaluate the impact of their decisions before executing them in a physical environment .
The good news is that supply chain leaders don ’ t need to rip and replace their capabilities to support continuous design . Continuous design informs decision-makers with better policies based on supply chain analytics . They can often get more out of investments in planning and execution systems by prioritizing the capabilities that align with their business model .
For example , a retailer may use a digital twin in supply chain planning to see what their micro fulfillment network should look like based on the location of their customers and expected delivery time . A company may also determine if they could support a change in replenishment frequencies to downstream locations from four to five days per week .
When companies design their supply chains for resiliency , the last-mile experience for customers will be better . For third-party logistics companies , it provides early visibility into demand , helping them plan their assets better and into supply constraints in transportation , allowing companies to develop alternate solutions before disruptions arise .
Upstream inventory optimization is essential for customer success and satisfaction
A clearer understanding of inventory lets companies allocate products to warehouse locations . This reduces delivery time , improves customer satisfaction , lowers delivery costs , and increases sales and revenue improvements .
Inventory optimization is more essential than ever , even as managing inventory is at a crossroads . On one hand , customers expect products to be available at the moment of need . On the other hand , supply chain disruptions have become commonplace across all sectors , worsened by the lingering effects of the COVID-19 pandemic and delays due to supply constraints . With far-reaching uncertainty , implementing inventory strategies has become a critical element . Now more than ever , right-sizing inventory has become a C-suite priority , as increased interest rates and a rocky macroeconomic environment – with no signs of improvement – result in an era of high carrying costs .
Inventory optimization is the practice of having the right amount of inventory available to meet demand , both in the present and in the future . Reaching an optimal level of inventory lets you not only address demand expectations but also reduce the costs of common inventory issues such as back orders , overstocking , and stockouts . But when
26 customized logistics & delivery Magazine I fall 2023