Three Ways To Add Value To Your Supply Chain
Extracting as much money from supply chain has been the traditional focus for businesses. One of the earliest examples can be seen in Henry Ford’s supply chain management strategy. Ford owned the ships that transported finished goods, the rubber plantations that provided rubber for the tyres, and the foundries that made steel.
Moving On To Value Chain
Cost reduction may have been the main focus for Henry Ford and many other but lately, the term “value chain” is increasingly used in place of supply chain. Adding more value, apart from cost control, is seen as critical to retain the competitive edge in the supply chain industry.
While ensuring costs do not spiral out of control, cost reduction itself cannot be the main and only goal for organizations, according to authors Gülyaz and Jack AA Van Der Veen.
In their white-paper on “How Logistics & Supply Chain can Create and Appropriate Customer Value” the authors describe the two concepts pertaining to customer value. One that is the value as seen by the customer which is the difference between the benefits received and the sacrifices they make. The second concept relates to how the customer perceives the value adds experienced before a purchase, during and post purchase.
Ways To Add Value
More Flexibility: Personalization is the buzz word that is seen across all industry domains. Giving the customer more control and flexibility in terms of services is crucial to stay ahead of the race. Some ways to offer more control and flexibility is to offer ‘logistic menu cards’ where the customers select the mode of delivery and the associated price.
Automated Processes: Teaming up with right supply chain providers can help streamline processes and ensure if there is continuous improvement of the processes including component purchasing, process re-engineering, packaging assessment, vendor or supplier evaluation.
Automation can help cut down costs related to labor while speeding up delivery and reaction time.
More Engagement: Collaborating and engaging with key stakeholders including employees, customers, and suppliers is key to driving more value into all processes of supply chain management. Nurturing a strong relationship with vendors and network partners will help supply chain firms to leverage complementary knowledge. The shareholders need to invest in intelligent resources that can enhance capabilities and bring in new processes that are in pace with the changing business environment. With value added operations, product configuration can be delayed until the last minute ensuring customer expectations are met more accurately.
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