Business Plan

Harnessing efficiency: Supply Chain Restructuring strategies

The supply chain restructuring incorporates a few strategies to work on the presentation of your production network. As your business develops and shrinks, and interest for items rises and falls, it’s fundamental that your inventory network is sufficiently adaptable to satisfy the needs of your industry. The supply chain restructuring also enables the individual to identify and implement specific plans to close any gaps in the supply chain. This type of restructuring can involve streamlining the production, transportation, and warehousing of goods. It can also involve finding new vendors to better meet the requirements of your business for the supply chain transformation.

Table of Contents

Insights of the Supply Chain Restructuring

The insights of the supply chain restructuring are when the best practices, from supply chain optimization to supply chain integration, don’t deliver the desired changes. Supply chain managers may need to consider supply chain restructuring when their best practices aren’t delivering the changes they’re looking for. Supply chain restructuring has been considered a very hot topic in recent years. Supply chain restructuring has been facing challenges based on the rise across the industry, including the manufacturing sectors. This is due to several factors, including an increase in online orders, unexpected natural events, pandemic-related disruptions, political instability, and intense competition for labour, storage space, and even raw materials. Several supply chain restructuring issues are forcing companies to re-evaluate their supply chain plan. The supply chain restructuring also includes optimizing the transportation services, the manufacturing part, and the storage of goods, adding the need for new suppliers to better fit the business enterprise for the supply chain transformation. The business entity picks to restructure its supply chain mechanism for the reasons includes as follows below mention:

  1. Increased rate of margin
  2. The efficiency has been improved
  3. To provide growth to the company
  4. To reduce the time spent on supply chain management
  5. To reduce the cost of the logistics

Wide range of activities under supply chain restructuring

The wide range of supply chain restructuring may also include the integration of supply chain functions with marketing functions and other business functions. Supply chain restructuring also includes taking into account the current supply chain process and architecture. In addition, supply chain restructuring may include the introduction of innovative concepts such as product re-design, process re-design, and network re-design to enhance customer service for the supply chain transformation. There has been a wide range of activities under the supply chain management has been mentioned below for reference:

Design of network

The design of the network helped the supply chain restructuring to improve the flow of products and services across the supply chain. This may include changes to the number and number of warehouses, transportation methods, and resource allocation throughout the supply chain restructuring for the supply chain transformation.

Redesign the process

Supply chain restructuring can also include making changes to manufacturing, logistics, and delivery processes to increase productivity and lower costs. This can include adopting new technologies or automating some processes.

Management of the supplier

The management system of the suppliers through the supply chain restructuring has helped the supplier contracts, which may also need to be re-evaluated and re-negotiated as part of the supply chain restructuring process to ensure they are in line with the company’s strategic priorities.

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Partnership collaboration

The partnership collaboration has been helping the supply chain restructuring, which may also involve partnering with other supply chain companies to improve flexibility and cost efficiencies. Supply chain partnerships may involve pooling resources, expertise, and knowledge to improve supply chain efficiencies for the benefit of all parties.

Acquiring new technology

The acquiring process of new technological advancements in the market has helped the supply chain restructuring sector to grow along with blockchain management, artificial intelligence, and the Internet of Things devices to achieve more transparency, accuracy, and efficiency for the whole supply chain transformation.     

Approaches for the Supply Chain Restructuring               

The supply chain restricting process includes making changes in one or more dimensions of the supply chain through acquiring the approaches to deal with the supply chain restructuring. The approaches to deal with the supply chain restructuring have been categorized into three various approaches, i.e., postponing the point of differentiation, alternation in the shape of the value addition curve of the supply chain, and also the advancement in the customer ordering point. Here are the explanations of each approach comprehensively to get an idea to deal with supply chain restructuring for the supply chain transformation as mentioned below:

Postpone the point of differentiation.

This approach to dealing with supply chain restructuring is based on the principle that the point of difference should be as close as possible to the curve’s endpoint. This means that all changes made to introduce differences in a product must be made near the customer at the time of delivery. This is important because it may help in implementing most of the activities at the aggregated level rather than at the variant level for the supply chain transformation.

Change in the shape of a value addition curve.

This approach to deal with supply chain restructuring based on most of the cost inclusion in the products should be moved to the supply chain end. This helps reduce inventory levels. Moving most of the cost inclusion toward the supply chain end is important because, in the event of unforeseen changes, the organization will be able to implement those changes with minimal costs.

Advancement in the customer ordering point

This approach to dealing with the supply chain restructuring can be based on the customer ordering point advancements process, real-time tracking, and personalized experiences. Automation improves efficiency, and inventory optimization prevents stockouts. These advancements create agile supply chains that could meet customer needs well. In this case, it is essential to differentiate between supply chain restructuring and supply chain integration management. This difference particularly shows the impact of the supply chain restricting and also the supply chain optimization on the shape of the value addition curve.

Benefits of supply chain restructuring

The benefit of supply chain restructuring is that data-driven supply chain management is essential in today’s increasingly complex global supply chains. However, data is not the only factor that influences supply chain management. Good vendor and supplier relations, effective cost management, securing proper logistics partners, and adopting cutting-edge supply chain technologies are also important factors. Here are the following benefits of the supply chain restructuring and also help in supply chain transformation as laid down below:

Collaborative assistance

Supply chain information is not automated across the entire supply chain. The companies also have that information fragmented, leading to missed sales opportunities. The integrated software system will also help to eliminate fragmented and easy-to-go information sharing, enabling a deep view to manage the end-to-end supply chain. Improved access to data gives supply chain leaders the context-based insights they need to make better decisions.

Enhance quality control

The companies have to improve quality control for the betterment of the supply chain restructuring that has more control over not just their direct suppliers but their suppliers’ suppliers also benefit from better quality control. For example, setting standard minimum quality criteria allows direct suppliers to find and partner to meet their secondary supplies. Similarly, process guidelines help suppliers meet your company’s quality needs.

High rise in efficiency rate

The high rise in the efficiency rate of supply chain restructuring will help gather real-time information on raw material availability and manufacturing delays, enabling companies to implement backup plans (e.g., sourcing materials from an alternative backup supplier) to avoid additional delays. Without real-time information, companies often have little time to implement plan B, which can lead to problems like out-of-stock inventory or late deliveries to end consumers.

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Keep up with market demand.

To keep up with market demand in the supply chain restructuring with real-time data and integrated data, supply chain leaders can better forecast demand and respond quickly to market fluctuations to avoid issues such as the bullwhip effect.

Minimise overhead costing

To minimize the overhead cost in supply chain restructuring with more accuracy in the demand predictions, companies can reduce the overhead costs associated with storing slow-moving inventory by stocking less low-velocity inventory to make room for higher-velocity, revenue-producing inventory. Warehouse fulfilment costs contribute significantly to overhead. Reduce these costs by optimizing your warehouse layout, adopting the right automation solutions to improve productivity, and implementing a better inventory management system.

Improvisation of risk mitigation

To improvise the risk mitigation in the supply chain restructuring by analysing both large-scale and small-scale supply chain data, risks can be identified, allowing companies to implement backup plans to quickly respond to unforeseen events and also by proactively managing supply chain issues, rather than responding to supply chain disruption, quality control problems, or other issues as they occur, companies can prevent adverse effects.

Cash flow management

The improved cash flow management in the value and advantages of the supply chain management systems mentioned above enable companies to make more informed decisions, select the right partners, forecast and react to market and demand fluctuations, and minimize supply chain disruptions. But it’s not yet all over. The individual should also improve a company’s financial performance.

Strategies to improve supply chain restructuring

The impact of globalization and changing customer demands are putting pressure on supply chain restructuring. As a result, you need to keep reinventing your supply chain to manage and reduce risks. By implementing the right strategies, you can unlock the growth and revenue potential of your supply chains. In addition, it allows you to take advantage of newer opportunities, such as truck scales, to enhance your supply chain. Here are certain strategies to implement and improve supply chain restructuring and also for the supply chain transformation:

Improve company-owned inventory

The improved company-owned inventory will help the company hold and store to manage the supply chain. Restructuring inventory can be expensive. The inventory management holding costs for the supply chain transformation can account for as much as the cost of an item that’s held in stock for a year for the amount of 60%. To optimize your company’s inventory, include demand planning and demand forecasting. Another way you can optimize inventory is to use truck scales for efficient inventory management. Truck scales provide precise measurements that can help you decide how much inventory to store.

Enhanced distribution network

The enhanced distribution network will help the supply chain restructuring through charts, graphs, and similar documents. This allows you to observe the process for any particular company function. This approach involves looking at the basic elements of a distribution network. It also looks at how the elements work together.

Take the help of technology.

Using technology to enhance the supply chain restructuring. Examine all current processes that are producing sub-par results. Identify areas where implementation of technology could enhance the processes. The correct technology, such as industrial-scale technology, can streamline, enhance visibility, and make the supply chain more accessible.

Establish a friendly supplier relationship.

It could be nice to establish a friendly relationship with a supplier for the supply chain restructuring. It has a direct impact on the success of your supply chain. Develop and sustain long-term supplier relationships, even after you’ve closed deals. Focus on developing long-term supplier relationship management strategies. Set ongoing value goals, measure performance, and manage conflicts.

Minimise carbon-footprint

To establish green initiatives and also to reduce carbon footprint from the supply chain restructuring. Supply chain and logistics need to adopt sustainable and socially responsible practices. Think about the environmental impact when selecting your suppliers. Establish a quantifiable set of processes and policies that support sustainability for the supply chain transformation.

Challenges in dealing with supply chain restructuring

There can be certain challenges to dealing with the supply chain restructuring. The foremost challenge is that the individual is trying to make predictions based on customer demand, and in many cases, the individual is relying more on gut feelings than data-based research. Supply chain managers for the supply chain transformation, on the other hand, are encouraged to let go of their preconceived notions, look for new data sets to build forecast models on and refine their results as often as possible. Here are some possible challenges while dealing with supply chain restructuring as laid down:

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Scarcity of material

It can be very challenging to manage the scarcity of the material for the supply chain restructuring from the start of the pandemic. Input shortages have been a major concern due to an unprecedented surge in consumer demand. Even today, retailers and suppliers are struggling to keep up with this demand in the face of limited availability of many components and materials. There are surveys with various growth-stage brands across our network, everything from foam shortages for furniture manufacturers to bike manufacturers losing their payment terms due to over-extended component suppliers.

Increase in the rate of freight cars.

It can be very challenging to manage the increase in the rate of freight car charges, as it was initially thought that the container shipping demand had grown significantly during the COVID-19 pandemic. The sales of the e-commerce industry have skyrocketed as a result of global lockdown measures, leading to an increase in global demand for imports of raw materials and consumer goods. Since the demand was much greater than expected, it has resulted in a shortage of shipping capacity and a record number of empty or unsold containers.

Difficulty in demand prediction

It can be very challenging to manage the difficulty in demand prediction in the supply chain restructuring. During of the global pandemic, demand forecasting has added another layer of complexity to supply chain management for many companies. The pandemic essentially destroyed the supply chain predictions for the supply chain transformation of the water for many retailers and consumer goods/services suppliers, leaving them with no guidance on how much inventory to hold or produce at any point in time.

Dynamism in customer attitude

The dynamism in customer attitude and behaviour has also changed significantly during the pandemic. For example, the threshold for delivery time has been lowered, and the requirements for a good customer experience have been increased. The challenge lies in having an adaptable supply chain restructuring that can hold the power of automation to optimize fulfilment and survive with increased demand with ease. A great example of this flexible supply chain is found in multi-channel order fulfilment services and inventory management software, which deal with supply chain restructuring for supply chain transformation.

The era of digital transformation

It can be very challenging to manage in the era of digital transformation; supply chain restructuring can be a plus point and a negative point for supply chain restructuring operations. However, several technologies have the potential to revolutionize the way they work with traditional supply chains, which include drone technology and robots, electric vehicles, and delivery on demand.

Conclusion

At last, we can conclude that supply chain restructuring is a complex process that requires thoughtful planning, strategic decisions, and careful execution. To summarise, supply chain restructuring can provide organizations with efficiency in cost reduction, flexibility in customer satisfaction, and supply chain transformation aligned with business objectives. Technology and data analytics collaboration with partners, changing market dynamics, and also risk mitigation emerging opportunities. In the end, it is very important to understand that supply chain transformation isn’t a once-and-for-all solution. It’s a journey of constant improvement. By adopting innovation, agility, and resilience, companies can gain a competitive mark and succeed in a changing global marketplace.

FAQ’s

  1. What can be the dimension of supply chain restructuring management?

    There are five dimensions of supply chain restructuring management, which are as follows: supplier partnership or contract, customer relationship, level of sharing the information, the quality of information, and last but not least that is postponement.

  2. What are the four phases of the supply chain restructuring?

    There are four phases in which the supply chain restructuring is done. These phases are the integration part, operational part, purchasing part, and the last one is the distribution part.

  3. What is the meaning of supply chain restructuring?

    Supply chain restructuring is the process followed by companies to enable them to uncover the weaknesses in their supply management and try to develop specific plans to rectify the mistakes and lacunae in the supply chain restructuring.

  4. How does the supply chain restructuring benefit the businesses?

    The benefit of raising the business to supply chain restructuring is also improving customer service, reducing cost, trying to improve demand prediction, and minimizing storage costs.

  5. What is the importance of blockchain in supply chain restructuring?

    The importance of blockchain in the supply chain restructuring can be kept as the record of transaction data to rely on a shared ledger. It is the responsibility of the ledger to track the record for the validation of the transaction across the complex system with many participants.

  6. Can artificial intelligence be useful for supply chain restructuring?

    Artificial intelligence can be a useful tool for supply chain restructuring to make decisions by using predictions and recommendations on optimal actions.

  7. What can be meant as the supply chain realignment?

    Supply chain realignment can be defined as the specialized value-driven data offering to assist clients in making good relations for greater resilience in the value of the global supply chain.

  8. How does the supply chain transformation process work?

    The supply chain transformation works to review the existing processes and try to implement a system for managing supply chain demand to align with business goals.

  9. How does the bullwhip effect help the supply chain mechanism?

    The bullwhip effect is the supply chain process that describes the small fluctuations in demand at the retail level that cause progressive fluctuations in the demand of the wholesale market.

  10. What can be the push and pull in the supply chain?

    The original meaning of the push and pull is used in the operations management of the supply chain management for the supply chain restructuring for pulling the system for production involving inventory management.

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