Business Analysis Toolkit

The world of business can never function without a proper supply chain, which is also called a logistics network. A supply chain is the network system of different people, functions, companies, methodologies, information, resources, and technology that are interconnected. Thus, supply chain measures must be taken by the business proponent to ensure that the process always goes smoothly.

In every business transaction or activity, there is always the question of how the supply chain is holding up. From placing orders for raw materials to sending them to manufacturers for processing, to suppliers and dealers for distribution, and finally to retailers for dissemination to consumers, a supply chain functions as an interconnection of intimately related processes that depend on each other for efficient functioning.

The first thing to be done when dealing with a supply chain is to ensure its efficiency. To be able to effectively measure a supply chain, certain metrics must be identified, defined, and analyzed, leading to an enhancement in the overall efficiency of the business. These metrics must be related to the nature of the business or organization. The results of the measures are what matters most. Having high inventory turnovers may mean good business operations. However, it is useless if the consumers are not getting what they want and what they need. If such is the case, the business will eventually fail.

The measurements obtained will reflect the efficiency of the supply chain. It is best if the measurements show a consistent level of performance in the chain. High consistency is usually indicative of good performance while low consistency shows problems or lags somewhere within the network. However, as with the example of high inventory turnovers, measurements are useless if they cannot be translated into action.

When the supply chain fails, the business fails. It may even be close to impossible to restore the normal operations of the business. Measurement is a very important aspect of supply chain management. Although there may be several measures already taken, there always exists the possibility that there may be certain areas of aspects of the supply chain that are not dealt with or measured. Thus, it is always in the best interest of the business to make sure that all areas of the supply chain are monitored well.

To be able to effectively make measurements, the metrics that are reliable and recommended for the business must be taken and identified. When metrics have been properly identified, the goals and objectives must be set, including targets for a certain period, which will give you something to look forward to. Obtain performance and efficiency data from reliable information and data-gathering processes and systems. When the data has been gathered, analyze them and determine whether or not the information points to improvement in the business. If not, adjust the metrics or adopt new ones.

Implementing supply chain measures may be a tedious task for every business proponent. However, to ensure that the business runs smoothly, the supply chain must also run smoothly. This cannot be ensured without the use of such measures.

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