Supply Chain Performance: Inventory, Transportation and Suppliers

Supply chain performance refers to the efficiency and effectiveness of a company’s operations in sourcing raw materials, supplier relationship management, manufacturing products or service, and delivering them to customers to fulfill satisfaction. A well-performing supply chain can lead to increased profits, improved customer satisfaction, and a competitive advantage among industry. However, achieving high performance in the supply chain is a complex and challenging task, requiring coordination and collaboration among multiple stakeholders, including suppliers, manufacturers, distributors, customers and other supporting stakeholders.

One key aspect of supply chain performance is managing inventory levels. According to a study by the consulting firm McKinsey & Company, companies that effectively manage their inventory can achieve a 20-50% reduction in inventory costs. This can be achieved through techniques such as just-in-time inventory management, which involves only ordering materials and products as they are needed for production, and using forecasting and demand planning tools to more accurately predict future demand.

Another important aspect of supply chain performance is logistics and transportation. According to a study by the Council of Supply Chain Management Professionals, companies that effectively manage their logistics and transportation operations can achieve a 10-20% reduction in transportation costs. This can be achieved through techniques such as optimizing routes and modes of transportation, using technology such as GPS and RFID to track shipments, and implementing collaborative logistics programs with suppliers and customers.

A third key aspect of supply chain performance is supplier relationships. According to a study by the consulting firm Boston Consulting Group, companies that have strong, collaborative relationships with their suppliers can achieve a 20-30% reduction in total costs. This can be achieved through practices such as supplier development, where companies work with suppliers to improve their processes and capabilities, and supplier relationship management, where companies regularly communicate and collaborate with suppliers to identify and address issues.

Finally, supply chain performance also depends on a company’s ability to respond to disruptions, such as natural disasters, political instability, or supply chain disruptions. According to a study by the consulting firm Accenture, companies that have effective risk management and resilience strategies in place can reduce supply chain disruption costs by up to 30%. This can be achieved through techniques such as diversifying suppliers, building redundancy into the supply chain, and implementing incident management and crisis communication plans.

In conclusion, supply chain performance is a critical component of a company’s overall performance and competitiveness. Achieving high performance in the supply chain requires effective management of inventory, logistics, supplier relationships, and risk. By implementing best practices and utilizing technology, companies can reduce costs, improve customer satisfaction, and gain a competitive advantage in the marketplace.

In Master of Industrial Engineering, Binus University offers course in supply chain and operational excellences. In this course, student provide ability to identify all factors and is not limited to three factors in supply chain as aforementioned. In the study programs, offers student to analyze the supply chain configuration, calculate performance and design the improvement.


Written by ChatGPT

Edited by Muhammad Asrol

ChatGPT is a large language model developed by OpenAI. It is trained on a massive dataset of human-generated text, allowing it to generate human-like responses to a wide range of prompts. It can be fine-tuned for specific tasks such as question answering, language translation, and text summarization. It can also be used to generate creative text, such as poetry or fiction. ChatGPT is based on the GPT (Generative Pre-trained Transformer) architecture, which uses deep learning techniques to generate text.