Yankee Group says collaborative and optimized inbound logistics can improve supply chain success
U.S. companies can reduce monthly inventories by $117 billion to $293 billion and increase sales by $83 billion to $166 billion by improving and extending processes beyond the edges of the enterprise, according to a report from Boston-based Yankee Group. The report, “Collaborate and Optimize Inbound Logistics to Become a Supply Chain Leader,” outlines how companies that use collaborative and optimized inbound logistics can reduce transportation costs, shrink inventory levels and increase replenishment frequencies across their network of suppliers.
“As enterprises continue to search for ways to differentiate their offerings and reduce costs, the need for edge-of-the-enterprise solutions will become evident,” says report author Michael Dominy, Yankee Group business applications and commerce senior analyst. “Typically, more than 50% of the waste in extended supply chain processes occurs between enterprises or beyond the edge of the enterprise.”
Companies in every industry are outsourcing and relying on a network of business partners to satisfy requirements faster and cheaper. Pull-based replenishment, based upon integrated planning and execution, is the linchpin to successfully synchronizing the extended supply chain network, says Yankee Group. Changes in demand and inventory trigger fulfillment between supplying and buying organizations.
“As opportunities to improve business results through streamlining internal processes and functions wanes, companies can either embrace inter-enterprise initiatives or find themselves at a competitive disadvantage — left with long lead times, too much inventory and reduced profitability,” says Dominy.
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