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To Control Supply Chain Costs, You Need to Know What They Are

Posted by Martin Verwijmeren on Nov 20, 2019 3:28:20 PM

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Over the past 25 years, companies have been using the supply chain as a competitive tool. The most successful manufacturers, distributors, retailers, and logistics providers leverage superior supply chain management practices to distinguish and elevate their brands. Most of them have done so by investing billions of dollars into home-grown systems to implement these practices, as off-the-shelf software has typically failed to meet requirements.

Typical off-the-shelf supply chain software does not present a unified view of supply chain operations costs. Most supply chain software exists in, and perpetuates, a siloed view of the world and so has been unable to capture costs that do not directly pertain to its area of operational focus. Thus, Transportation Management Systems (TMS) have focused on freight and accessorial costs, Warehouse Management Systems (WMS) have captured handling and storage costs, and so on. Because all these costs are usually reported back to an ERP system only after their associated events have transpired, they cannot contribute to improved and timely decision-making, only post-facto analysis.

As the world’s only unified cloud platform for supply chain execution, MPO has taken on this challenge and truly mastered it. MPO employs a sophisticated, yet easy to maintain, database construct for capturing rates and costs. By capturing all elements of supply chain costs, such as handling, logistics, customs, and storage, and applying them in a timely manner, businesses can make the best decisions and choices for a range of supply chain functions, like Distributed Order Management, Transportation Management, Reverse Logistics, and Vendor Managed Inventory.

MPO takes a three-fold approach to give users timely visibility into, and control over, supply chain costs.

1. Employ a database structure designed to capture the many different types of rates and costs incurred in the supply chain.

2. Aggregate and compute these costs accurately for effective decision-making. MPO accomplishes this in real-time and applies this holistic view of costs to a range of supply chain decisions, such as where to source a product from, how to optimally fulfill an ecommerce order, or the best way to route a specific shipment.

3. Apply the supply chain costs appropriately to enable effective analytics and ongoing improvement. This is the most vital step and one in which MPO’s natively order-centric supply chain platform offers an unparalleled advantage to its customers. The multi-level order platform can capture any cost and apply it at the appropriate level, be it the sales or purchase order, the shipment, or even at the product or SKU level.

This approach really distinguishes MPO’s software and makes it a true game-changer for the industry.


Topics: Supply Chain Analytics, Supply Chain Management, MPO, Supply Chain Costs

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