White Paper

Optimizing The Labor Supply Chain

Source: RedPrairie

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Most companies have known for some time, albeit at an intuitive level, that supply chain excellence can deepen market penetration, improve sales performance, and increase end-to-end process efficiency, from supplier to customer. However, in 2003 an international research team determined that a clear and direct relationship exists between an organization's financial success and the depth and sophistication of its supply chain. Savvy companies are constantly looking for additional opportunities to make their supply chain more efficient.

One significant cost element that seems to get little attention in this process is labor. This paper will discuss the impact that labor has on the overall cost of the supply chain, and the solutions available for optimizing labor's impact.

Labor is traditionally the largest component of a company's distribution and other fulfillment cost, typically ranging between 35 and 65 percent. In fact, in most fulfillment operations the cost of labor is greater than inventory. Nevertheless, the concept of supply chain management has historically been synonymous with inventory management, planning and optimization. With increased pressure on companies to reduce costs, the time is right to examine the impact of the labor supply chain.

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