Supply chain is a critical element in any business. Technological advancement has revolutionized supply chains, ensuring consumers receive their products delivered in time. Today, consumers can reliably order products and deliver them the same next time. Companies can bank on supplier risk management software to facilitate same-day or next-day delivery in a competitive market.
What is supply chain management?
Supply chain management involves the manufacturing process and the movement of products from the suppliers to the relevant consumer. Some organizations have in-house teams to oversee the supply chain process.
Supply chain management includes several functions, including:
- the availability of raw materials
- warehouse capacity for the company and supplier
- comprehensive logistics management to efficiently meet the lead time
- forecasting and planning supply chain procedures for real-time delivery
- inventory management
- order, dispatch, and delivery procedure
Understanding that one of these processes can significantly influence the rest is critical. For instance, a shortage of raw materials affects the manufacturing process and delays the supplier’s ability to deliver the products to the consumer. The consumer may fail to get the product in time or get it at a premium price to cater to the scarcity of raw materials.
Advantages of supply chain management
Supply chain management is a far-reaching process. The product’s availability to the consumer is an interconnection of several processes. Here are the top benefits of supply chain management in a company.
- Improved customer experience
Supply chain process is the engine that ensures the consumer gets their needs satisfied. Effective supply chain management minimizes
- The inability of the supplier not meeting consumer needs met
- Probability of delivering the incorrect order to consumers
- Prolonged delivery time
- Failure to deliver goods at the expected time and place
Supply chain management helps establish a reliable reputation, enhancing consumer retention. Further, it increases consumer trust to influence brand loyalty. This trend retains existing clients and attracts new ones.
- Reduced operating costs
An ineffective supply chain impacts an organization’s bottom line. Supply management teams should hold constant reviews to reduce operational costs. It also helps reduce the turnaround time for products to arrive at the customer’s desk.
- Enhanced cash flow
Reliable supply chains are efficient, from producing raw materials to delivering the product to the consumer. An organization can forecast a product’s demand in the market and determine appropriate pricing to earn a sustainable return. The balance between supply and pricing ensures that the business is sustainable and adjusts accordingly. A seamless process is critical to enable organizations to improve cash flow. It also makes financial projects easy for future business.
- Efficient sourcing and procurement
Sourcing and procurement are essential procedures in the supply chain. Sourcing ensures new suppliers are added to the line for smooth transition and progression. It is critical to find the most suitable supplier that meets the expectations of the firm and the consumer. The procured supplier should also meet the company’s expectations and consumer standards.
- Safeguards consistent supply of raw materials
Raw materials sustain the production of goods and services. Supply chain management maintains reliable solutions to ensure the raw materials suppliers are remunerated in time to facilitate production. The supply chain team should be given the priority to avoid shortages and mitigate potential disruptions.
- Enhanced inventory management
An efficient supply chain should achieve the ideal status to facilitate a remarkable inventory management process. It also ensures that warehousing facilities are available for the suppliers. Well-managed supply chain ensures inventory management is suitable for the product, time and place.
- Better working relationship with distributors
Efficient supply chain management accounts for properly distributing goods and services to cover all the consumers. Supply chain thrives on reliable relationships with distributors. Otherwise, the products would lie in the warehouse for days while the consumer gets frustrated by an unprecedented shortage.
The end of efficient supply chain management is the product in the hands of the consumer. Therefore, ensure you maintain a good working relationship with distributors for a successful business.
- Ensures adherence to acceptable ethical standards
Supply chain management should adhere to the set legal and ethical standards. Legal standards may differ from one region to another. An efficient supply chain ensures that the processed products comply with consumer standards for varying regions. Closely monitoring the supply chain and working with manufacturers, suppliers and distributors ensure the integrity of goods throughout the process.
- Earns a competitive advantage
Supply chain has challenges, advantages, and complexities unique to its brand. Many organizations find it challenging to deal with its inefficiencies and drag behind other competitors in their niche. However, supply chain management enables a business to prioritize its strength with the consumer and earn a competitive advantage over others in the market.
- Dependent relationship
Supply chain management thrives on the success of each independent process. One element in the chain can potentially influence the rest. Consequently, the benefits of supply chain have a ripple effect and can positively influence agreeable outcomes at every stage. Working to realize effective supply chain management achieves a wealth of benefits for every team player. For instance, an improvement in inventory management leads to continued business as consumers make frequent orders increasing revenue and cash flow.
- Unmatched efficiency
Supply management includes resource procurement, operational logistics and delivery. When these processes are strategically planned, managed, and executed, organizations can predict the market trend and act accordingly. Supply chain helps firms to adjust to unprecedented disruptions, evolving marketing patterns, and fluctuating industry trends.
Limitations of supply chain management
Supply chain management is a necessary element for efficient business. The limitations associated with supply chain management include:
- Expensive to implement for small enterprises to implement
- Involves many complexities, therefore, making it a complicated process
- Lack of coordination among supply chain management departments can lead to non-performance
- Requires trained and personalized human resources for effective operations
- Lack of reliability because it relies on communication among different departments
Efficient supply chain management enables organizations to survive and thrive in cut-throat competition. It involves multiple suppliers, and distributors in each stage to ensure the consumer gets products at the right time and price.