July 16, 2020
Competition today is fierce across all industries. Time, money, and resources are not easy to come by, new protocols disrupt and add costs, and playing the pricing game is a race to the bottom. Meanwhile, there’s an ever-rising demand for sustainability and a shift to a circular economy. Businesses are expected to be as efficient and environmentally-friendly as possible.
In such challenging socio-economic conditions, organizations are being forced to refine, restructure, and reinvent existing operations. The only way for businesses to survive is by doing what they do more effectively and with less waste. Change is constant and swift, forcing companies to scramble to adapt. The good news is businesses that do act in time can expect to ride the wave without sinking. How are companies thriving in today’s climate? Resource optimization.
Organizations constantly over-utilize and under-utilize resources. These resources may be in the form of time, money, manpower, physical goods, machinery, and transportation. Making efficient use of resources – allocating exactly the resources needed to carry out a task or meet a goal – minimizes waste. It also makes resources available for other critical tasks. The process of matching available resources to achieve organizational goals with maximum efficiency, in line with modern business models and studied methods, is known as resource optimization.
Traditionally, companies are seen as being made up of loosely-linked, independent departments. Every department is responsible for managing itself, having its own funding, and sets of resources. The departments don’t often interact or share resources directly, and every department is expected to handle their own emergencies. Further, the data available to a department isn’t always immediately available to other departments. In short, organizations most often run as systemic hierarchies.
Resource optimization requires taking a more holistic vision of the organization. Organizations are seen as a network of projects, all working toward achieving the same goal. Projects become interlinked, drawing from the same pool resources. Resources become a shared, finite pool to be allocated when necessary. It’s all about assigning a project the resources it needs to succeed in the correct order of priority, without depriving other projects. Information, materials, and resources all flow seamlessly between the various stakeholders in the business process.
Optimizing has become much easier in recent years, thanks in no small part to real-time data gathering, artificial intelligence, and communication advances – like SR’s very own instant measurement system. Increasing computing power and the IoT makes optimization accessible to almost every business at a reduced cost.
Depending on the number of inputs, processes, stakeholders, and timelines in an “eco-system” (economic system) or value chain (work-flows and supply chains), resource optimization can be complex and challenging to implement, but it offers many worthwhile opportunities to create more collaborative and profitable relationships across your businesses value chains.
The two highest cost components of COGS in most bulk material industries are typically material and transportation. It takes a great deal of money to procure, store, move, process, and deliver materials. Operations revolve around material availability and effective material scheduling. Errors in inventory management are, unfortunately, frequent and typically catastrophic, leading to huge write-offs, missed deadlines, and reduced credibility with stakeholders.
With resource optimization, inventory outcomes are fixed. It’s always possible to order only what production needs. Production can operate with confidence, knowing there will always be enough material on hand. Waste from over-procuring can be avoided and transportation happens smoothly. It all leads to reduced COGS, increased investor confidence, and higher profits across the board.
Stockpile Reports’ iPhone app, drones, and fixed camera solutions generate real-time data about your inventory. You can use the data to optimize your operations.
Every manager needs to forecast to manage effectively. They need to anticipate rises and falls in demand, be prepared for emergencies, and nip problems in the bud before they become too big to handle. Without technology, however, forecasting is more of an art than a science and relies on estimates, which may or may not align with reality. When estimates are off-target, it leads to a waste of resources.
Thanks to technology, it’s possible to forecast with a stunning level of accuracy. Inventory outcomes are set in stone. It’s always possible to know how much supply you have on hand, how much you have ordered, and how much space is left. With the help of task scheduling software, the demand for manpower can be predicted. Using historical data, it’s possible to determine where specific constraints lie and what resources you’ll need to handle problems well in advance.
Many managers underestimate the importance of transparency. In a typical organization, many managers schedule resources simultaneously using a central tool. Resources often get borrowed, interchanged, and sometimes overlooked. Task schedules change constantly, and there’s an ever-growing email thread about the various changes taking place. It can be chaotic, leading to many misunderstandings. The miscommunication and lack of transparency lead to project failure. In fact, the Project Management Institute (PMI) says the #1 reason projects fail is miscommunication.
Resource optimization ushers in transparency and trust. With real-time data, every manager working in the company is aware of what’s happening at any given time. There’s less cause for confusion and misunderstandings can be reduced to almost nothing. The trust engendered is also better for the workforce, as employees become more driven and motivated to perform.
Inefficient use of resources results in high overheads and big administration costs. Companies often under-utilize internal talent, due to poor scheduling and because of lack of skill visibility. Instead of using the internal resource, they hire an external one, which is a major waste. The same inefficiency can be observed in every other operational area. For example, many organizations order material in excess. They then lose material to deterioration and end up buying new space for other material instead of using existing space. It’s a waste.
By using resources effectively, you can reduce expenses and operational costs drastically. By using existing employees, you save a great deal of money. If you optimize your supply chain, you order only what you need, never too much or too little. Every optimization you make translates to huge savings. The savings you make may seem small, but they snowball into something significant. It leads to a hefty increase in revenue.
Implementing resource optimization requires a deep study of your organization, including its strengths, weaknesses, and future goals. Data must be gathered and a conceptual optimization must be built, in collaboration with all the decision-makers in your organization. Two techniques are commonly utilized during the implementation: resource leveling and resource smoothing. New techniques are being researched to make the process better.
SR can provide the technological tools necessary to optimize your inventory. We provide time-tested, market-leading solutions that are proven to work. Our fixed cameras, drones, and the iPhone app allow you to measure your inventory effortlessly, at the touch of a button. You’re saved from having employees do the inventory counting manually, and you always have the data you need to operate effectively.
Resource optimization, as you may have guessed, is a constant process. Changing market conditions, the economic outlook, and business goals all influence it greatly. It requires a long-term commitment, constant effort, and the right tools. However, the rewards you receive are well worth the effort.
Get in touch with Stockpile Reports if you’re ready to take your bulk material logistics and supply chain operations to the next level.
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