Supply Chain Optimisation: The key to success in today's business landscape

In Bangladesh, the need for supply chain optimisation has become pressing due to the pandemic's disruptions to global trade and supply chains. Photo: TBS

Over the years, business philosophy in Bangladesh, as in other parts of the world, has undergone a significant transformation. 

Previously, many decisions were made without a structured approach. However, in today's world, there is a greater emphasis on thinking, writing, and practising in a more systematic manner. 

Recently, I had the opportunity to watch a television interview with Anwar Hossain, the founder of Anwar Group. In the interview, he made a thought-provoking statement, "If you can't win by purchasing raw materials, you can't gain by selling the product." 

This statement can be easily understood from the perspective of supply chain optimisation and highlights the importance of optimising the supply chain to achieve business success.

As a seasoned management consultant in a Big Four firm, I have had the privilege of working with numerous government and private sector entities in Bangladesh. 

What I have observed in the real world is that many organisations fail to appreciate the importance of optimising their operations. This is a crucial factor in today's business landscape if we aim to remain competitive. 

Recent examples in both the global and Bangladesh contexts highlight the importance of supply chain optimisation. 

For instance, the Covid-19 pandemic exposed vulnerabilities in the global supply chain, resulting in widespread disruption and economic losses. Companies that had optimised their supply chain processes were better equipped to handle the challenges posed by the pandemic. 

The Covid-19 pandemic has brought the importance of supply chain optimisation to the forefront of global business discussions. Companies worldwide are realising that having an efficient and resilient supply chain is crucial to surviving in today's rapidly changing and unpredictable environment. 

In Bangladesh, the need for supply chain optimisation has become even more pressing due to the pandemic's disruptions to global trade and supply chains.

Recent examples of organisations that have successfully implemented supply chain optimisation strategies are Amazon. Amazon has revolutionised the e-commerce industry by optimising its supply chain through a vast network of warehouses, transportation options, and sophisticated algorithms that predict demand and manage inventory. 

As a result, Amazon can deliver products to customers faster and more efficiently than its competitors. 

Apple's global supply chain allows the company to quickly and efficiently deliver products to customers all around the world. By optimising its supply chain, Apple can control costs, reduce waste, and stay ahead of its competitors.

In Bangladesh, local companies are also investing in supply chain optimisation strategies to remain competitive in the global marketplace. 

One example is the implementation of advanced warehouse management systems that can track inventory levels and manage logistics more efficiently. Another example is the use of data analytics to forecast demand and optimise production schedules.

Here are three key ways in which supply chain optimisation can increase bottom-line profits:

Reduce Costs: By optimising the supply chain, businesses can reduce costs associated with production, transportation, and inventory management. 

For example, reducing lead times and improving inventory management can lead to lower carrying costs and less waste. Improved transportation and logistics can also reduce costs associated with transportation and distribution.

Improve Efficiency: Supply chain optimisation can improve efficiency by streamlining business processes and reducing bottlenecks. This can lead to improved productivity and faster time-to-market, allowing companies to respond more quickly to changes in customer demand. 

For example, automating manual processes and utilising data analytics can improve decision-making and reduce errors, ultimately leading to improved efficiency and productivity.

Enhance Customer Satisfaction: It can also improve customer satisfaction by ensuring that products are delivered on time and at the desired quality. Improved lead times and inventory management can lead to faster delivery times, while improved quality control can reduce product defects and increase customer satisfaction. Satisfied customers are more likely to return and recommend products to others, ultimately leading to increased revenue and profitability.

Here are several technologies that can be used to optimise the supply chain, including:

Artificial Intelligence (AI) and Machine Learning: AI and machine learning can be used to analyse large amounts of data, providing insights that can help optimise inventory management, demand forecasting, and production planning.

Internet of Things (IoT): IoT sensors can be used to track and monitor the movement of goods through the supply chain, providing real-time visibility into inventory levels, delivery times, and potential bottlenecks.

Blockchain: Blockchain technology can be used to create a secure and transparent record of transactions throughout the supply chain, improving traceability and reducing the risk of fraud or errors.

Robotic Process Automation (RPA): RPA can be used to automate repetitive and manual tasks, such as order processing and invoice management, improving accuracy and reducing lead times.

These technologies, among others, can help optimise the supply chain, reducing costs, improving efficiency, and ultimately increasing profitability. It is essential for organisations to evaluate which technologies are most appropriate for their specific supply chain needs and to invest in the right technology to remain competitive in today's fast-paced business environment.

IT companies can play a crucial role in optimising supply chain activities in Bangladesh by focusing on key areas. They can develop solutions that leverage emerging technologies like AI, IoT, and blockchain to provide real-time visibility into supply chain operations, enabling better decision-making and proactive management of potential disruptions. 

If a small company optimises their supply chain, they can benefit from increased efficiency, reduced costs, and improved customer satisfaction. By streamlining their operations, they can reduce waste, improve inventory management, and ensure timely delivery of goods and services to customers.

For example, a small grocery store in Bangladesh can optimise their supply chain by partnering with local farmers and suppliers to source fresh produce and other goods at competitive prices, and implementing inventory management software to track and manage stock levels. 

This can result in better pricing and quality for customers, reduced waste and spoilage, and improved profitability for the store.

A company can start optimising their supply chain by following these steps:

Map out the current supply chain process: The first step is to understand the current supply chain process, including all the steps involved from raw materials sourcing to product delivery. This will help identify inefficiencies, bottlenecks, and areas for improvement.

Identify key performance indicators (KPIs): Once the current process is mapped out, it is important to identify KPIs that can be used to measure the success of the optimisation effort. Common KPIs include lead times, cycle times, inventory levels, and order fulfilment rates.

Analyse data and identify areas for improvement: Using the KPIs as a guide, analyse data to identify areas of the supply chain that need improvement. This can include optimising inventory management, improving transportation and logistics, or sourcing materials from different suppliers.

Implement changes and monitor results: Based on the analysis, implement changes to the supply chain process and monitor the results. This may involve investing in new technology, reorganising supply chain teams, or renegotiating contracts with suppliers.

Continuously improve: Supply chain optimisation is an ongoing process, and it is important to continuously monitor and improve the process over time. This can be achieved by regularly reviewing KPIs, gathering feedback from customers and suppliers, and staying up to date with industry trends and best practices.

Supply chain professionals can develop themselves for supply chain optimisation by taking a holistic approach to their work and continually seeking to improve their knowledge and skills. This involves understanding the entire supply chain process, from procurement to delivery, and identifying areas for improvement.

Networking with other supply chain professionals and joining industry associations and groups can also be a valuable way to develop knowledge and skills in supply chain optimisation. 

By collaborating with others in the industry, professionals can gain new insights and perspectives on how to optimise their supply chain processes

Illustration: TBS

Mohammad  Ashraful Islam Khan is the Head of Supply Chain Advisory Services, Management Consulting at KPMG Bangladesh. 

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.