Logistic optimisation means optimising the whole process flow, from ordering products to delivering them to the customer.
Good logistics optimisation is what separates industry leaders from followers. By making better decisions in supply chain and logistics operations, an organisation gets an opportunity to reduce costs by 10% to 40%. It makes it crucial for companies to know how their logistic optimisation is performing and how they can improve it.
Here are 5 golden rules for effective logistics optimisation.
Golden rules for effective logistics optimisation
Should have quantified and measurable objectives
Objectives are the way through which we define what we want to achieve with logistic optimisation.
When you have quantified and measurable objectives, then only computers will be able to determine which solution is better and then only management can decide if the optimisation process is providing expected results.
Models should represent logistics process on point
Through models, we can translate operation requirements to the computer. Then only the computer can pick the right algorithm for it. Ifnot done properly, the logistics optimisation algorithm provides infeasible or suboptimal results.
Must consider variability explicitly
All supply chain and logistics processes have variability. For example, variability of time and loading from a trip to trip,variability in items picked from DC on different days. Ignoring such variability leads to failure. It is essential to consider variability explicitly in every model.
Derive accurate, timely, and comprehensive data
Data is what makes the supply chain and logistics optimisation effective. If the obtained data is inaccurate and/or not received timely, the solution will not be optimum. Data comprehensiveness is also essential if the optimisation focuses on execution.
For example, the weight of a shipment is not of any use if loads are limited by the truck volume.
Delivery must provide results that enable execution, management, and control
Solution for any supply chain and logistics is not successful until the plan is executable and management expects the desired ROI from it.
The field requires a solution that is easily understood,unambiguous, and executable. Management requires aggregate information about the solutions and their performance. It helps them compare the performance with key performance benchmarks within provided facilities and assets.
Logistics optimisation is the greatest challenge but also the biggest opportunity. Let an efficient and robust solution from Adiona handle your supply chain and logistic optimisation. Get in touch with us today to discuss your needs.