Finally, a staged emphasis on agreed upon objectives is needed to measure results. This course of action will work to ensure that the transformation project works seamlessly, and toward the agreed upon outcomes.
A company that has been able to utilize this approach and bring about significant savings is an industrial product manufacturer, with more than $20 billion in annual revenue.
From a detailed analysis based on twelve months of customer orders, benchmarking activity and establishing order-to-delivery, cycle time and quality metrics, it was clear that there were inefficiencies in the supply chain—specifically in the movement of product from the U.S. to more than 15 countries in Asia-Pacific, a region that was experiencing significant growth.
Understanding the current state of operations allowed CEVA to develop a picture of the desired state, which for this customer meant decreasing the 32-day origin to destination cycle time. Further analysis also illustrated that this process had been deteriorating over time.
With only 14 days of that being allocated to transit, we understood that processes needed to be improved, specifically in the area of visibility so we could see when product was being release from the supplier, when they were moving and how we could synchronize that with the shipping schedules of the steamship lines.
The result was a supply chain inventory reduction of more than $4.5 million and an overall origin to destination cycle time of 26 days, a six-day improvement.
By utilizing supply chain management and logistics as an area for improvement, businesses from all sectors are reaping the benefits of change – from increased cost savings and a streamlined time-to-market operating structure to a more cohesive and flexible business model.
Understanding that your business requires change is the first, and often hardest, step in the process that will eventually lead to a stronger business. Following the above-mentioned steps will help with development and allow any company to better understand where it currently is, and ultimately where it wants to be.
Remember, improvement is out there for those who choose to seek it – and in most cases, it’s often the simplest solution that is the best.