During 2024, almost 80% of companies’ supply chains worldwide suffered interruptions, and most experienced between one and ten interruptions, according to the Supply Chain Resilience Report 2024.
These failures make it urgent to improve the logistics efficiency, so we present you with a guide with actionable strategies to transform your supply chain operations. So, how to improve supply chain efficiency?
What is supply chain efficiency?
Supply chain efficiency refers to the ability to deliver products at the right place, right time, and lowest possible cost while maximizing available resources. It’s about creating a seamless flow from raw materials to finished products in customers’ hands.
Efficiency differs from effectiveness: while effectiveness focuses on meeting customer requirements, efficiency concentrates on how well you utilize resources to meet those requirements. The most successful supply chains balance both.
The efficiency-effectiveness balance
The ideal supply chain achieves high service levels while minimizing resource consumption. This delicate balance requires continuous monitoring and adjustment of operations.
For example, maintaining excessive inventory ensures product availability (effectiveness) but ties up capital and warehouse space (reduced efficiency). The goal is to find the optimal middle ground for your specific business needs.
Why supply chain efficiency matters
Improving supply chain efficiency directly impacts your bottom line. When operations run smoothly, costs decrease while customer satisfaction increases.
Efficient supply chains provide a significant competitive advantage because companies with optimized supply chains can respond faster to market changes, reduce operational costs, and deliver superior customer experiences.
Business benefits of an optimized supply chain
An efficient supply chain delivers multiple advantages:
- Reduced operational costs
- Improved cash flow through better inventory management
- Enhanced customer satisfaction through reliable delivery
- Greater agility to respond to market changes
- Reduced environmental impact through optimized transportation
According to the State of Logistics 2025 study, in the American logistics companies surveyed, the main criteria for evaluating logistics performance are the following:
- Level of customer service
- Delivery success rate
- Total cost of the transfer
- Delivery time
- Inventory turnover level
- Number of total incidents
- Amount of CO² generated
Key metrics to measure supply chain efficiency
Perfect order index and service rate
During the order fulfillment process, the Perfect Order Index measures the percentage of orders delivered complete, on time, damage-free, and with accurate documentation. This comprehensive metric reflects overall supply chain performance from the customer’s perspective.
Service rate tracks the percentage of customer orders fulfilled from available inventory without backorders or delays. Together, these metrics provide insight into how well your supply chain meets customer expectations.
Inventory turnover ratio and order accuracy rate
Inventory turnover ratio measures how quickly you sell and replace inventory within a specific period. Higher turnover generally indicates better efficiency, though extremely high turnover might signal understocking.
Order accuracy rate tracks the percentage of orders processed correctly throughout the supply chain. Errors at any stage can lead to costly problems later, so this metric is of critical efficiency.
Financial performance indicators
Key financial metrics include:
- Total supply chain management cost as a percentage of revenue
- Cash-to-cash cycle time (days between paying suppliers and receiving customer payments)
- Return on supply chain fixed assets
- Cost per order
These indicators help quantify the financial impact of your supply chain operations and identify areas for improvement.
Supply chain efficiency vs. supply chain resilience
The COVID-19 pandemic highlighted the tension between efficiency and resilience:
- Efficiency focuses on cost optimization
- Resilience emphasizes the ability to recover from disruptions
Many companies previously prioritized operations with minimal inventory and just-in-time delivery. But this approach left supply chains vulnerable to disruptions, as demonstrated by the widespread shortages experienced during the pandemic.
Finding the right balance
Modern supply chains must balance efficiency with resilience. This implies:
- Maintaining strategic inventory buffers for critical components
- Diversifying supplier networks while maintaining strong relationships with key partners
- Investing in visibility tools that enable quick responses to disruptions
- Developing contingency plans for various disruption scenarios
7 proven strategies to improve supply chain efficiency
1. Increase supply chain visibility
Supply chain visibility enables tracking products through all stages—from raw materials to customer delivery. This transparency helps identify bottlenecks, reduce delays, and improve coordination.
This allows your business to have control of what is happening during each stage of the supply chain while also letting you quickly respond to challenges, bottlenecks, and other disruptions. The visibility tools provide real-time analytics into inventory levels, shipment status, and potential disruptions.
This is why at EP Logistics, we make use of top technologies that provide you and your businesses with full supply chain visibility, allowing you to closely monitor every stage of the supply chain in real-time.
Benefits of enhanced visibility
Improved visibility delivers multiple advantages:
- Early detection of potential disruptions
- Better inventory management through accurate stock level tracking
- Enhanced supplier coordination through shared data
- Improved customer service through accurate delivery estimates
2. Develop strong supplier relationships
Your suppliers are key partners in achieving supply chain efficiency, so we recommend proper supplier relationship management where you prioritize a win-win partnership.
Regular communication with suppliers helps identify opportunities for process improvements, cost reductions, and innovation. Sharing forecasts and plans allows suppliers to better align their operations with your needs.
Collaborative approaches
Consider these approaches for stronger supplier relationships:
- Implement supplier scorecards to measure and improve performance
- Establish regular review meetings to discuss challenges and opportunities
- Develop joint improvement initiatives that benefit both parties
- Share relevant data to enable better planning and execution
3. Implement automation and technology solutions
The warehouse automation can transform supply chain operations by avoiding manual errors and improving speed and consistency.
The use of robotics in supply chains is expected to grow annually by 14.7% by 2025, according to industry forecasts. This growth reflects the significant efficiency gains available through automation.
Technology options for different supply chain components
- Warehouse Management Systems. Automated storage and retrieval systems, pick-to-light systems, and voice-directed picking.
- Transportation. Route optimization software, automated load planning, and electronic proof of delivery.
- Inventory Management Systems. RFID tracking, automated reordering systems, predictive analytics.
- Order Processing. Electronic data interchange (EDI), automated order validation, and robotic process automation.
4. Optimize inventory management processes
Effective inventory management requires a significant investment, so it’s important to optimize it to balance stock availability with transport costs, to avoid wasted resources, stock-outs, and customer dissatisfaction.
At EP Logistics, our warehousing solutions are already integrated with advanced supply chain software that helps your business monitor and manage your inventory to ensure optimal inventory levels at all times.
Inventory optimization techniques
- ABC analysis. Categorize inventory by importance to focus resources on high-value items.
- Just-in-Time (JIT) inventory. Minimize inventory by receiving goods only as needed for production
- Economic Order Quantity (EOQ). Calculate optimal order quantities to minimize total costs.
- Safety stock optimization. Maintain buffer inventory based on demand variability and lead time uncertainty.
Demand forecasting best practices
Accurate forecasting is the foundation of effective inventory management:
- Combine statistical forecasting with market intelligence
- Incorporate seasonal patterns and trend analysis
- Regularly review forecast accuracy and adjust methods accordingly
- Collaborate with sales and marketing teams to incorporate promotional plans
5. Enhance logistics and distribution networks
Optimizing how products move from suppliers to customers can improve efficiency while reducing costs.
Transportation optimization
- Consolidate shipments to maximize vehicle utilization
- Implement route optimization to reduce miles traveled
- Consider alternative transportation modes based on cost, speed, and environmental impact
- Evaluate carrier performance regularly and adjust partnerships accordingly
Warehouse operation improvements
- Optimize the layout to minimize travel time and maximize space utilization
- Implement cross-docking to reduce handling and storage requirements
- Use slotting optimization to place fast-moving items in easily accessible locations
- Consider automation for repetitive, labor-intensive tasks
6. Leverage real-time analytics
Data-driven decision making transforms supply chain performance, modern analytics tools turn raw data into valuable insights for continuous improvement.
Implementing analytics for improvement
- Start with clear business questions you need to answer
- Ensure data quality through validation and cleansing processes
- Develop dashboards that highlight key performance indicators
- Create regular review processes to act on analytical insights
7. Invest in employee development and training
Investing in your team’s capabilities ensures they can maximize the potential of your supply chain systems.
Training approaches for operational excellence
- Develop standardized operating procedures and ensure consistent training
- Cross-train employees to increase flexibility during demand fluctuations
- Implement continuous improvement methodologies like Lean or Six Sigma
- Create career development paths to retain supply chain talent
Implementing your supply chain efficiency plan
Improving supply chain efficiency requires a structured approach. Start by assessing your current performance against industry benchmarks to identify the most significant improvement opportunities.
Framework for efficiency improvements
- Assess. Measure current performance using key metrics.
- Prioritize. Focus on improvements with the highest potential impact.
- Plan. Develop detailed implementation plans with clear responsibilities.
- Execute. Implement changes with careful monitoring.
- Review. Measure results and adjust as needed.
Change management considerations
Supply chain improvements often require changes to established processes. Effective change management ensures these transitions succeed:
- Communicate the reasons for change and expected benefits
- Involve key stakeholders in planning and implementation
- Provide adequate training and support during transitions
- Celebrate early wins to build momentum
How EP Logistics enhances supply chain efficiency
EP Logistics takes an integrated approach to supply chain optimization, focusing on customized solutions rather than one-size-fits-all approaches. Our cross-border expertise between the US and Mexico provides particular value for your company.
Our comprehensive service integration—spanning warehousing, transportation, customs brokerage, and e-commerce fulfillment— allows you to reduce transfers, minimize delays, and improve overall efficiency.
Improving supply chain efficiency requires a multifaceted approach that balances cost optimization with service quality and resilience. By implementing the strategies outlined in this guide, you can create a supply chain that delivers a competitive advantage.
Contact us at EP Logistics to improve your company’s supply chain efficiency while you focus on growing your business.
