Applications
Typically, supply chain managers are trying to maximize the profitable operation of their manufacturing and distribution supply chain. This could include measures like maximizing gross margin return on inventory invested (GMROII) (balancing the cost of inventory at all points in the supply chain with availability to the customer), minimizing total operating expenses (transportation, inventory and manufacturing), or maximizing gross profit of products distributed through the supply chain. Supply chain optimization addresses the general supply chain problem of delivering products to customers at the lowest total cost and highest profit. This includes trading off the costs of inventory, transportation, distributing and manufacturing. In addition, optimizing storage and transportation costs by means of product / package size is one of the easiest and most cost effective initial implementations available to save money in product distribution.
Supply chain optimization has applications in all industries manufacturing and/or distributing goods, including retail, industrial products, and consumer packaged goods (CPG).
Read more about this topic: Supply Chain Optimization