Supply Chain Trends

How Does Total Cost Perspective Help Make Better Supply Chain Decisions?

Working with quality suppliers is a top priority for almost every business, and companies need to assess suppliers with an eye in the direction of overall cost, quality, and performance.

Furthermore, complicated supplier relationships, untrustworthy providers of material supply and growing customer expectations also add to the considerations when putting together a supply chain.

Recent Supply Chain Trends

In the 20th century, the goal was often to produce a quality product that could stand the test of time. But now, decreased product life cycles and innovation has pressured supply chains to be versatile and adaptable.

Supply chains are now more interconnected than ever. Information coming from various sensors located at disparate suppliers from manufacturing and transportation operations offers a lot of data concerning the quality of products, production process and timeliness of delivery. Concurrently, this information may show possible issues in procurement operations, product quality and delivery. Tracking and investigation of this information may offer companies chances to intervene before issues become big problems.

With integrated supply chains and new business models, companies must reconsider their talent development for successful procurement procedures, as current workforce training models do not align with current needs. Procurement and supply chain managers who are at ease with data-driven decisions and have a total understanding of end-to-end supply chains are going to be in high demand. Skill gaps will be a challenge for companies in the near future.

Total Cost Management

Speaking of changing practices, companies used to make purchasing decisions based solely on price and bulk discounts. However, buying resources in bulk increases storage and material management costs.

Now, companies are taking a more complete approach to buying resources, referred to as total cost management. This approach considers many factors, such as transportation and inventory costs.

Companies can get a substantial view of their total supply chain costs by auditing transportation costs.

As a business grows, so does its freight costs. However, above-average rises in freight costs could show expenses are reducing a company’s bottom line. After getting a quote from a freight company directly or from the rates in transportation management system, supply chain managers can determine if the lowest cost carrier is the ideal choice or if a different carrier with faster transit time is the better option.

Supply chain managers can also determine inventory costs by considering four primary factors: money tied up in inventory, space occupied, handling costs, and depreciation. These costs are typically computed for an entire year and expressed as a percentage of the cost of inventory items.

For making decisions, like analyzing production amount, it is crucial to ascertain the incremental holding costs for a year. To put it differently, what will be the even more holding costs indicated as an annual cost for the items being bought or generated.

Our specialized focus gives us the ability to work closely with our clients and get to know each company and its culture. And our personal experience in the industry gives us special insight into your job needs. It also means that we can provide quality results, quickly. Contact ZDA today to get started on finding supply chain jobs!


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