For manufacturers and other businesses that operate an extensive supply chain network, ensuring that the entire enterprise is performing at an optimal level is a difficult goal to achieve. There are numerous factors to consider at every step of the supply chain, from production to storage to transportation. When expenses fluctuate, the effect on an organization's profitability can be immense.
Fuel costs, for instance, have long been a major concern for supply chain operators. As a finite resource with many available wells located in destabilized parts of the world, oil is a highly volatile commodity and its market price can increase dramatically within a short window of time. A report released by the Department of Energy's Energy Information Administration stated that as of July 23, the average price of diesel gasoline rose for the third straight week, increasing another 3.6 cents to $3.903 per gallon, Logistics Management reported.
Many service providers attempt to account for these expenses by passing along costs to their customers or clients. According to a survey of 420 shippers conducted by the news outlet, approximately 39 percent of participants stated that they expected their fuel surcharges to increase in the coming months. However, this approach could adversely affect the profitability of an enterprise as clients may become unsatisfied with their price structure and take their business to a competitor.
A better solution for addressing fluctuating operational costs is to ensure that the enterprise is running as efficiently as possible while eliminating any unnecessary expenses. Supply chain management software can be a major asset to organizations looking to streamline operations as much as possible. In an effort to improve their efficiency, businesses across the globe are expected to increase their investment in data collection software and other enterprise management resources in the coming years. According to a report released by RnRMarketResearch, the worldwide supply chain management software market is forecast to increase at a compound annual growth rate of 10.58 percent through 2016. By facilitating enterprise oversight, these tools allow business leaders to better see how individual components affect the company as a whole and make any changes that will cut down on wasteful practices.