Supply-Chain Optimisation: Reduce Lead Times, Boost Margins

Discover how supply-chain optimisation reduces lead times and boosts margins for SMEs.
June 21, 2025
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Understanding Supply-Chain Optimisation

Supply-chain optimisation is crucial for small and medium-sized enterprises (SMEs) looking to enhance efficiency and profitability. By reducing lead times and increasing margins, businesses can achieve better customer satisfaction and financial performance.

Key Terms in Supply-Chain Management

To begin, let's clarify some essential supply-chain terms. Lead time refers to the period between the initiation and completion of a production process. On-Time In-Full (OTIF) is a key performance indicator (KPI) measuring the effectiveness of supply-chain delivery. Cost-to-serve calculates the total cost associated with delivering a product to a customer.

Reducing Variability in Inbound Shipments

Reducing variability in inbound shipments is a fundamental step in cutting safety stock and carrying costs. As variability decreases, businesses can maintain lower inventory levels, reducing overhead and freeing up capital. A practical tool for visualising this process is a flowchart, which helps identify bottlenecks and areas for improvement.

Case Studies: Retail, Electronics, and Food

Three mini-case studies illuminate the benefits of supply-chain optimisation in diverse sectors:

  • Retail: A prominent retailer implemented dual-sourcing to mitigate risks, resulting in a 15% margin increase.
  • Electronics: Near-shoring strategies reduced lead times by 20%, significantly enhancing customer satisfaction.
  • Food: Vendor scorecards improved supplier performance, leading to a 10% reduction in logistics costs.

Key Supply-Chain KPIs

Understanding and monitoring key supply-chain KPIs is essential. Focus on inventory days, logistics cost per unit, and perfect order rate. These metrics directly impact gross margin (GM) and offer insights into supply-chain efficiency.

90-Day Optimisation Roadmap

Embarking on a 90-day optimisation roadmap can yield significant improvements. Start by analysing current processes, setting clear objectives, and leveraging data analytics. Collaborate with stakeholders to implement changes and track progress against KPIs.

Conclusion and Next Steps

Supply-chain optimisation is a powerful tool for SMEs seeking to improve operational efficiency and profitability. By understanding key terms, reducing variability, and focusing on KPIs, businesses can achieve tangible results. For further guidance, consider consulting with supply-chain experts or exploring resources like Supply Chain Beyond.

Ready to optimise your supply chain? Contact us today for a personalised consultation.

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