Increasing EBITDA (earnings before interest, taxes, depreciation, and amortisation) through supply chain optimisation is critical for any competitive business. The supply chain is in an active state whenever goods, equipment, products, or materials move within or between companies.
While the processes in the supply chain are often considered functional and not a source of revenue, supply chain optimisation will increase the profitability of your company or organisation. Here we look at how you can unleash supply chain optimisation to improve cash flow, work more effectively and enhance your EBITDA.
Optimising Your Supply Chain
The supply chain can be complex with many processes, infrastructure, partners, and equipment, such as forklifts, platform trucks, pedestrian tugs, utility trucks, and last-mile delivery electric vehicles. Having all of these parts of the puzzle working in synchrony takes planning, forecasting, collaboration, and asset utilisation:
- Planning and forecasting – You will need to collect and utilise data to improve your planning and forecasting. By leveraging technologies such as machine learning and logic, it is possible to minimise working capital and reduce inventory.
- Collaboration – Supply chain optimisation requires collaboration with partners, suppliers, and customers. By exchanging information, you can understand needs better, provide excellent customer service, and increase your market penetration.
- Asset utilisation – Fully utilising your assets needs to be carefully balanced with meeting customer demand. Your transportation costs, inventory levels, and capital investment require careful consideration. Transport efficiency focuses on just-in-time production at one end and hitting customer delivery windows at the other.
Improving Your EBITDA
To improve your EBITDA with supply chain optimisation, you might consider introducing proactive supply chain strategies such as:
- Conducting a supplier audit and choosing local and regional suppliers to reduce costs, meet sustainability goals, and work with those that understand your local market.
- Investing appropriately in low-maintenance, fuel-efficient, and non-polluting electric vehicles to reduce operational costs.
- Reviewing supply chain costs quarterly to avoid financial blind spots as market pricing changes.
- Focusing on simplifying a few processes that drive supply chain spending.
- Defining responsibilities, compliance, and process steps.
- Increasing order picking efficiency by restructuring floor-level processes.
- Optimise routing and minimise travel distances.
- Making your suppliers aware of your needs and expectations.
- Eliminate waste by identifying customer value and removing processes that don’t facilitate this.
- Diversifying your suppliers to reduce market risks.
- Adjusting your inventory rules based on seasonal factors.
- Investigate methodologies such as lean principles, PDCA, and DMAIC.
To optimise your supply chain operations, view our range of electric last mile delivery vehicles.