Supply Chain Efficiency – What is it and How to Improve it?

Inez Bartosińska

Wonder how to maintain an agile business strategy and enhanced inventory management? An efficient supply chain is crucial to achieving this goal. Saved money, reduced wait times, and as a result – improved customer satisfaction. Boost your supply chain efficiency by a practical and cost-effective strategy.

What is supply chain efficiency?

A supply chain is a system of available human, physical, financial, or other resources involved in product delivery from suppliers to customers. So how can we define supply chain efficiency? Simply put, supply chain efficiency is a measure of how a company manages its resources in the best way possible so that products can be delivered to the right place quickly and at a minimal cost. 

How do companies manage the efficiency in the supply chain?

Coming up with a well-functioning and efficient supply chain strategy may seem complicated, and honestly speaking, it is not an easy task. Not impossible, though! The companies who succeed in managing the efficiency in the supply chain know that the core mission is to create reliable transportation solutions that excel in the market. Reduced shipment costs, shipment visibility, and enhanced service efficiency are essential in the process. However, to maintain a durable distribution network, it is crucial to monitor emergent solutions and constantly improve by implementing them in the company’s supply chain management strategy.

How do you calculate supply chain efficiency?

An ineffective or fragmented supply chain may result hazardous for your business workflow or viability. To ensure you keep the supply chain efficiency stable, or better, growing, you need to know how to calculate it. The most important part is to monitor the ever-changing market. Gathering, selecting, and analyzing key supply chain metrics will enable you to keep track of business workflow and efficiency. This approach will help you spot possible inefficiencies in the ecosystem and embrace the company’s strengths. Many KPIs like availability and service rate or stock rotation calculations can help you find the balance between customer satisfaction and stock level to facilitate the process even more.

5 ways to improve supply chain efficiency

Supply chain efficiency can be improved in many ways. The approach differs depending on the type of industry or organization. However, several methods can be applied to streamline the supply chain efficiency regardless of the company’s scope.

Automate your supply chain processes

A great way to improve supply chain efficiency is by finding ways to automate it, especially if you don’t want to worry about time-consuming tasks and human errors. The automated shipping process facilitates order processing and shipment. It saves your time at the same time reducing effort and costs. 

Automation technologies may be a big-budget investment. However, if you can’t afford them directly, streamline your business supply chain productivity by relying on technologically enabled 3PLs (Third Party Logistics). Many companies use third-party businesses to outsource some of their services, such as warehousing or distribution, as it is an economical yet cost-effective Supply Chain Management strategy.

Implement supply chain software

Another idea to achieve an efficient supply chain model is by implementing supply chain software. Not only will it enable you to monitor all the processes with just one platform or application, but it will also streamline the management amongst all teams and departments as you will be able to monitor them simultaneously. 

Adopt new technology (blockchain/machine learning)

Blockchain is a technology that has conquered the market. Despite the fact it is mainly associated with cryptocurrencies, it can be widely used to improve other business branches such as supply chain management. Blockchain technology can help companies streamline data flow and record it, so all parties have easy access to information like product prices, dates, or locations.

Machine learning applications in the supply chain are another great solution to eliminating supply chain management’s inefficiency. Artificial Intelligence based solutions gain more popularity among large corporations and startups as they demonstrate the high potential of improving supply chain operations. According to Gartner’s latest predictions, machine learning methods will develop rapidly in the nearest future.

Increase your supply chain’s visibility

Producers and consumers demand precise information as well as faster and cheaper deliveries. How to meet these expectations and boost supply chain efficiency? You can’t control what you can’t see, so enhance supply chain visibility. A thorough overview of all operations enables swift collaboration between all stakeholders. It is crucial to know where your inventory is at all times – in stock, in transit, or at its final destination, and provide the same information to all the parties. 

Standardize transparency

To boost your company’s position as a reliable enterprise, minimize reputational risks and stay compliant with market regulations, you need to consider improving supply chain transparency. Well-standardized transparency enables access to high-quality, precise information on product ingredients and materials, product origin, and the conditions in which it was produced. Providing access to the entire set of data, linked and aggregated together, can be used to improve processes, eliminate losses and improve customer satisfaction. Furthermore, transparent supply chains can benefit in identifying shortage and quality problems. 

What are the costs of an efficient supply chain?

Maintaining an efficient supply chain requires constant market monitoring and responding to its needs with improvements. New technologies are emerging at every step of the way, whereby to keep up with them may turn out costly. But does it have to? There are many ways to cut down the damage. One of the known and straightforward methods is working with 3PLs providers. Supply chain services and order fulfillment they offer can help you focus on customers’ needs while saving money. Remember to frame your goals by preparing a carefully planned strategy and be sure to evaluate it regularly. 

Another high-priced factor in the supply chain concerns warehouse storage. Storing inventory and supplies in a warehouse is not a low-cost service. However, if you plan to make the most of its space, you could be surprised by the total saving outcome.

How important role takes technology in boosting supply chain efficiency

Strengthening supply chain efficiency wouldn’t be possible without all the technologies available in today’s logistics market. Implementing them in your business is crucial to meet your objectives and achieve success. By adapting supply chain software, blockchain and machine learning solutions, or WMS (warehouse management systems), you will streamline the SCM in no time. More accessible data collection, seamless tracking, improved communication between stakeholders, or managing shipment from your mobile are just a few of the benefits you will gain if you apply tech-based solutions in your company. 

Types of software solutions in supply chain management

Among the ways to improve supply chain efficiency, software solutions continue to be considered the best option. Several software could be applied in supply chain management. We will guide you through the most relevant ones and help you choose the one tailored specifically for your business. 

Logistic management software

Logistic management software helps companies increase supply chain efficiency metrics in various processes. Thanks to various tracking tools, you can easily monitor all production cycles from feedstock delivery to shipping finished products to the customers. Moreover, it will help you to prevent delays and resolve many logistical issues like ineffective communication.

ERP systems

Plan responsive and efficient supply chain using ERP systems. This solution will help you schedule orders and connect them with purchasing systems of your partners. It will streamline your supply chain efficiency by automating shipment tracking, integrating the company’s financials, creating effective job planning, and more. Additionally, if you find ERP systems too expensive, you can rent them from an application service provider. Either way, it is worth considering them while planning the logistics budget. 

Inventory planning or forecasting systems

While developing cost efficient supply chain strategy, it is essential to focus primarily on inventory planning and forecasting systems. Effective inventory management and anticipating future demands will help your company stay proactive with potential risks and sales. Moreover, you will have a chance to eliminate cash flow, minimize the risk of inventory shortages caused by floating orders and, as a result, streamline your business logistics.

Supplier Management solutions

Most of the companies purchase raw materials, goods, or services from suppliers. Efficient communication between all stakeholders is fundamental for the system to work successfully. 

Suppose you don’t want to risk any unpredicted behaviors or poor performance results. It would be best if you considered adopting supplier management tools. It is a solution that can easily enhance the supply chain lifecycle and ensure that you get the right value adequate to the expenses. Organizations that plan and conduct supplier management according to specific processes and boundaries are more likely to receive predictable, high-quality goods and services from their suppliers on a timely basis.

Warehouse and order management systems

Warehouse and order management tools like WMS can boost supply chain efficiency in many ways. With such modern software tools, you can manage inventory storage, enhance order productivity, or access real-time shipment tracking. WMS are systems designed mainly to monitor everyday operations of your warehouse, so know better what improvements should be applied, how to scale down spending, and create a more efficient supply chain strategy.


In a present global economy, developing an efficient supply chain model should be your primary goal. The supply chain is an essential process, and if it is configured correctly, it can bring significant value to you and your customers. Various sets of tools, methods, and services can analyze your company’s strong and weak points in the SCM so you can adjust the capabilities and create a present-day relevant strategy. If you struggle to choose the best solutions for your business, we will gladly assist you on this matter.

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