A basic 1-2-3 formula can boost supply chain efficiency to new heights. The best companies have found a way to sort through the static and tune in to what customers want, and what those companies need to do to meet that need.

There are three areas to focus on, concludes Getting Value from Industry Best Practices, from SAP Executive Insight:

• Customer Service
• Supply Chain Responsiveness, and
• Inventory

In terms of delivering top-of-the-line customer service, it’s often at the top of the list for successful companies.

The two pillars of customer service are on-time delivery and proper lead time for order fulfillment.

And there doesn’t have to be a trade-off by sacrificing inventory levels and carrying costs. If communications are timely and hitting on all cylinders, peak performance in customer service and inventory efficiency can be compatible.

It’s a matter of determining and setting up a customer collaboration communication system that best suits your own needs.

For most companies, this means there’s a way to share real-time alerts to events that impact the supply chain — a truck breaks down, your supplier runs late, etc. The better system you have for obtaining this information and then quickly sharing it with affected customers, the better off you’ll be.

This melds into supply chain responsiveness. One of the best ways to beef up your ability to nimbly respond to rapidly changing requests is to collaborate with key vendors to establish Vendor Managed Inventory (VMI).

It then becomes a team effort, instead of disjointed pieces trying to connect.

The final piece of the puzzle is managing your actual inventory.

Once you’re plugged in with the needs of your customers and you’ve provided a mechanism for quickly reacting to those needs, it’s much easier to calculate how much inventory must be on hand.

Taking these calculations, combined with a “what-if-worst-case-scenario” accounting, you should be able to lower the amount of inventory on hand, and reduce your inventory carrying costs.

Tags: customer, inventory, supplier, supply chain, vendor managed inventory, vendors