Generative Data Intelligence

What is a Fat Supply Chain?

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Node: 4357283

Most Supply Chains are overweight. What do I mean by that? Well, let me explain.

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A Fat Supply Chain is what we call a supply chain that’s operating with more resources than it actually needs – it’s carrying excess operational weight that’s slowing everything down and eating into your profits.

Think of it like this: imagine you’re carrying a backpack on a long hike. If you’ve packed it with things you don’t really need, you’re using more energy than necessary, getting tired faster, and probably not moving as quickly as you could.

Let me paint you a clearer picture of what this “fat” looks like in your supply chain:

  • Your warehouses might be storing more inventory than they need to
  • Your transportation routes might be taking longer paths than necessary
  • Your procurement processes might involve too many steps or approvals
  • Your customer service might be duplicating efforts across departments
  • Your overall operations might be using more resources than required to get the job done

Most businesses don’t even realise their supply chain has gotten fat. It’s like that slow weight gain that happens over years; you don’t notice it day by day, but suddenly, your favourite jeans don’t fit anymore.

Our research shows that most supply chains are carrying around 24% more cost than they need to. That’s like finding out you could drop a quarter of your body weight just by making some smart changes to your routine.

But unlike personal weight loss where you can hop on a scale or check your BMI, measuring your supply chain’s fitness isn’t quite so straightforward. That’s why we turn to benchmarking – it’s like getting a complete health check-up for your supply chain, showing you exactly where you need to trim down and tone up.

Think of supply chain benchmarking as your business’s BMI (Body Mass Index). Just as BMI helps us understand where we stand in terms of healthy weight ranges, benchmarking shows us how our supply chain performs against industry standards.

The top 20% of performers are considered “best in class” – that’s where you want to be. The middle 50% achieve “parity,” while the bottom 30% are classified as “disadvantaged.”

You’ve got several ways to start your benchmarking journey. The simplest approach is comparing performance across your own business units – like measuring performance across multiple warehouses.

However, this internal-only view might not tell the whole story if your entire operation needs toning up. The next step is looking at external comparisons, perhaps through industry peers or a dedicated benchmarking service.

Remember, a fat supply chain isn’t just about costs – it’s about agility too. Just like excess weight can slow you down and make you less flexible, a bloated supply chain can make your business less responsive to changes and less competitive in the market. The good news? Once you identify where the excess is, you can start working on getting your supply chain back into fighting shape.

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