12 Ways to Improve Supply Chain Efficiency

An efficient supply chain is essential for getting your products to customers and keeping your costs as low as possible. As your company’s needs develop, your supply chain strategy must also change to reflect that growth. With some simple tips, you can improve supply chain efficiency and reap the benefits.

Quick Links

Common Bottlenecks and Supply Chain Efficiency Challenges

Improving efficiency is the primary goal in supply chain management, and the balance between boosting efficiency and preparing for disruptions can be challenging. Many organizations grapple with efficiency issues, including:

  • Unpredictable markets: When you can’t predict consumer demand and material shortages, staying agile and meeting changing consumer demands is difficult.
  • Unexpected delays: Consumers and end users expect rapid results. Long distances with many steps make the supply chain vulnerable to delays.
  • Limited visibility: An inability to track materials’ movements from locations to supplies can hinder efficiency. If you’re unsure when goods will reach their destination, you must wait before taking the next steps.
  • Port congestion: The pandemic resulted in considerable port congestion, which remains a challenge across the world as manufacturers address the backlog.

Effective supply chain management can help you overcome these challenges and boost your efficiency. An agile and resilient supply chain means adopting a new mindset throughout your business. 

Actionable Tips to Improve Supply Chain Efficiency

Every manufacturing operation is different, and combining approaches is essential to provide your end users with the most efficient and reliable service. The following tips can help you boost supply chain efficiency:

1. Implement Automation

Implementing automated components in your supply chain strategy can increase efficiency and cost reductions. For example, automated purchasing features include software programmed to automatically place an order when inventory falls below a certain level. This type of automation frees up employees to do other essential work and ensures your inventory levels are accurately maintained.

2. Increase Supply Chain Visibility

Connectedness and transparency at all tiers are critical to making your supply chain more efficient. Supply chain visibility is your company’s ability to track all components of your product as they move through the chain on their way to your facility. When you allow your suppliers to check your inventory in real time, they can adjust and plan ahead to fulfill demand. You can also give your team access to inventory details to more effectively strategize and communicate.

3. Build Strong Supplier Relationships

Supply chain efficiency requires manufacturers to consider every party involved. Any inefficiencies on the supplier side affect your efficiency.

Evaluate your suppliers and foster strong relationships with those whose performance aligns with your organizational goals. Identify those who underperform and consider replacing them with more reliable options.

4. Collect Data

Your supply chain strategy should be based on timely data about your current supply chain management. To make informed decisions about improving your supply chain management, implement software allowing your team and suppliers to access production, inventory and purchase data.

5. Measure Efficiency With Metrics

Supply chain efficiency metrics can measure your performance and identify opportunities for improvement. As you boost visibility across your supply chain, use the data to inform your team and help them collaborate to achieve shared goals. Some typical metrics to consider include:

  • Supplier performance index: In line with building strong supplier relationships, you can use this metric to rate supplier performance in six areas — quality, cost, delivery, service level agreements, reliability, lead time and customer satisfaction. It combines all the areas into one score that helps you quantify how well your suppliers perform.
  • Inventory turns: This metric measures how quickly inventory turns over compared to industry standards. The lower the number, the less waiting time.
  • Throughput: Throughput measures the number of goods that move through a process in a specific period.

Many other metrics exist to support your supply chain efficiency. Ensure you choose the right combination for your needs and goals. 

6. Develop a Supply Chain Efficiency Plan

improve supply chain efficiency with an adaptable plan

Efficiency can only happen when you back it up with a comprehensive plan. You and your team can improve supply chain efficiency with a solid strategy. Your plan should be adaptable, so review it regularly and take input from your team to boost your supply chain management efforts.

7. Improve Cost Awareness

Because there are so many variables along the supply chain, managers may not be aware of each other’s expenses. By providing everyone with financial data, you and your team will understand where and how your company is spending money. This financial transparency enables better communication and consolidation of expenses.

8. Enhance Returns Management

Many manufacturers focus on getting new products out in the marketplace, often meaning that returns management falls by the wayside. But an efficient returns system will help you reduce waste and identify consistent product issues for a stronger supply chain.

9. Create a Project Plan

Supply chain management is an ongoing process, which means you need a comprehensive project plan to help you reach your goals. A good project plan provides a framework for when and where to make investments in your supply chain and how you can best develop strategies, identify opportunities and risks, and establish improved communication throughout the chain.

10. Elevate Your Inventory Management

Improving your inventory management will boost your overall efficiency. Keep track of your inventory at all stages of the supply chain to avoid inefficiencies to ensure your team has the right quantities to meet demand. When they have the necessary inventory, they can focus on efficiency instead of scrambling to manage the excess or deficits.

11. Adopt a Culture of Continuous Improvement

Streamlining your supply chain is not a once-off task. Staying efficient requires you and your team to constantly work to improve your efficiency.

The best way to identify opportunities to improve is to track your data. Monitor your metrics to gain insight into areas like order accuracy, warehouse capacity and shipment times. You can use this information to pinpoint where your supply chain is efficient and what areas need more attention.

12. Work With a Contract Manufacturer

Working with a reputable contract manufacturer will provide you with consistent, predictable products, enabling you to streamline your supply chain strategy for maximum productivity and efficiency. Working with a manufacturer that understands the importance of efficiency and actively removes layers from the supply chain is essential to reducing costs and achieving your efficiency goals.

boost supply chain efficiency with PBZ

Boost Your Supply Chain Efficiency With PBZ Manufacturing 

Supply chain efficiency is critical for any business looking to meet changing customer demands. To start with an experienced contract manufacturer, request a quote from PBZ Manufacturing today. We are a full-service manufacturer, handling every element of the supply chain from engineering to shipping. 

We remove excess steps in the supply chain and have the engineers, equipment and ingenuity to reduce project completion times, minimize handling and logistics, and lower costs. Contact us to learn more about resourceful manufacturing. 

Contact Us

Updated March 12, 2024. Originally published April 21, 2020.

Previous ArticlePBZ Featured in an Article by The Fabricator Next ArticleContract Manufacturing vs. Private Label