How can Good Supply Chain Management Help Improve Business Performance?

Supply chain management refers to a company's manufacturing and logistics processes, which may occur from the acquisition of raw materials to the actual supply of goods to fulfilment centres and points of sale. Any company's performance is inextricably tied to how well it manages the supply chain. SCM practices prosper not only by lowering costs, but also by growing investment sustainability, commercial expansion, and lowering the overall cost of doing business.

Businesses with weak supply chain controls are more likely to be impacted by economic downturns. As a consequence, an appropriate or representative use and maintenance of their supply chain mechanism will differentiate a failing from a profitable business.

The harsh reality is that, even though a company's brand success is tied to its supply chain management, this factor is often overlooked; in fact, supply chain management attracts the smallest strategic consideration as compared to other aspects of business operations. Not just that, but figures suggest that supply chain management is one of the most misunderstood aspects of strategic management.

Let's dig a little deeper into the significance of supply chain management and how it might make or break a company's overall success. The following 5 points would explain how improving supply chain management is crucial for a sustainable business model.

1. The customer is the backbone of every company.

Profitable sales growth is a sure indication of a company's prosperity. Customer care and meeting customer needs are two of the most significant aspects of this. Consumer retention and loyalty are heavily dependent on a brand's supply chain delivery efficiency, so the customer must be prioritised when developing a supply chain strategy.

7-Eleven, a Dallas-based multinational grocery store chain, focuses on offering basic grocery products, drugs and toiletries, and magazines. Their primary positions are in the United States and Asia. In most locations, they cater to a wide range of consumer requirements 24-hours a day. Customer loyalty and retention are essential to this company's supply chain strategy. It has grown to be one of the world's largest and most profitable businesses, thanks to its supply chain emphasis on providing exceptional customer support.

The success of a company's supply chain may have a significant effect on how customers perceive the brand. One of the most important reasons for a business to enhance its supply chain management is customer loyalty.

2. The money saved represents the amount earned.

Recalculating the cost of satisfying consumer demand is another approach to improve supply chain management. The cost of the supply chain will account for a considerable portion of a product's overall cost. Furthermore, a surplus of inventory will stifle cash flow by tying up working capital. One way to learn how supply chain costs impact market performance is to manage the costs of meeting consumer needs.

Top-performing organisations that adopted supplier value improvement programs had overall cost savings of about 12%, according to a 2013 Aberdeen group report.

The “cost to serve analysis” technique also exposes startling supply chain costs. The same can be said for any of the company's brands. In the course of manufacturing or purchasing, storage, and distribution to consumers, some goods may naturally incur higher costs than others. There is a fine line between cost-cutting in the supply chain that is necessary and unnecessary. Instead of concentrating only on cost-cutting, the emphasis should be on eliminating non-value-adding operations and practices.

3. The lowest link is “suppliers”.

No matter how effective a company's supply chain management is, a few of the ties, such as the retailer, are unlikely to be under the control of the company. Suppliers play a major role in a company's growth, so partnering with them to reduce supply chain volatility is important.

Coca-Cola, the world's largest manufacturer, marketer, and seller of non-alcoholic syrups and drink concentrates, has a highly active supply chain. When it relates to the scale and appearance of their goods, the company's planning, delivery, and shipping logistics are all in line with the segmentation plan for their clients. Furthermore, the brand recognises the importance of suppliers in the overall supply chain efficiency, and that is why they have schemed their supply management to make suppliers the supply chain's strongest component.

Supply chain uncertainty costs money and has a negative effect on consumer experience, making it an especially destructive force in overall company success. The best way to avoid production bottlenecks and product constraints, all of which can stymie market growth, is for a company and its main vendors to work together.

Customers do not distinguish between the success of a company's manufacturers and the performance of the company itself. For a long time, world-class corporations have acknowledged this reality and have responded with encouraging results.

4. Working capital is influenced by inventory control.

There isn't a single company that doesn't respond to inventory. Even if a corporation is a service supplier, replacement parts, consumables, and appliances are likely to be transported via a supply chain.

If a company's profit depends on merchandise distribution, however, an inventory management system is needed. Stock, like clients, is something that the company relies on. The way an organisation does inventory handling has a significant impact on the overall success of the company.

One of the reasons for Amazon's tremendous popularity is that their supply chain stretches from the lowest stages of inventory to the management of the order itself, all of the way to the top to an exceptional multinational delivery chain for their goods. Amazon will reportedly ship nearly 10 million different goods. The company's ability to control inventory and the range of goods it sells gives it an advantage over rivals, making it a prime example of what good supply chain management can do.

Inventory management has a significant effect on working capital and, in some cases, cash flow. A company's inventory control scheme should be investigated if it needs to minimise operating capital and increase supply chain efficiency.

5. Make use of mobile devices.

This technology will assist in enhancing field sales, merchandising, and marketing, as well as allowing direct customer services (through customised location-based coupons or services that improve employee productivity in the field). Providing information such as provenance, sources, item contents, and specialised information on demand about recycling, local content, or production methods reinforce the brand and help businesses to communicate directly with consumers.

Creating a best-in-class supply chain is no simple feat. However, finding the time to plan is worthwhile. Given that supply chain efficiency is directly proportional to a company's profitability, its value cannot be overlooked at any expense.

Conclusion

Increased supply chain efficiency is accomplished by a top-down approach in which leadership plays a central role. Leaders must communicate effectively, establish protocol guidelines, establish a hierarchy of priority, inspire employees, and implement a strong training program. Management and staff can build a performance-based atmosphere within an organisation and its supply chain as they work together.

A skilled logistics specialist is recommended for an organisation aggressively pursuing improved supply chain efficiency. Their experience can help in the introduction of operational changes, supply chain management, and target re-evaluation, and employee efficiency.

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FAQs

Q. What will supply chain management do to improve efficiency?

Ans. 5 ways to make the supply chain more effective -

• Increase the visibility of the supply chain
• Automate where it matters, and keep track of all essential bits
• Make contact with your IT department
• Examine the current educational plans
• Have a solid project schedule

Q. What part does supply chain management play in this?

Ans. By allowing for greater visibility and tracking, computerised chain management has revolutionised the modern industry. The technology enables real-time tracking of the whole supply chain, including shipment and invoicing. In layman's terms, incorporating technology into supply chain management means that: Operational cost control.

Q. What are the four supply chain stages?

Ans. The initial period, development phase, a maturity phase, and decline phase are the four standard phases of a product's life cycle. Each step is distinct, and often necessitates the use of various value chains. Supply managers must devise supply plans that take into account the distinct requirements of each process.