The Importance of Supply Chain Management

Efficient supply chain management won’t only reduce your company’s budget, it can also boost your organisation’s operational efficiency.

With skilled supply chain logistics management part of your business ecosystem, it’s possible to strategically align your processes from end-to-end. Thus realising economic and market value and giving your firm a competitive advantage over your business rivals.

With a vast number of industry sectors (inc automotive, retail and commerce etc) having undergone a digital transformation over the last couple of decades, the need for better management of the supply chain logistics has become even more apparent. In order to address this demand for improvement, processes which just a few years ago were labour-intensive, disorganised and time consuming have now been streamlined thanks to high-speed communications and automated systems.

So, let’s take a closer look at this vital element of running any business and why it is so essential to the success of your company.

What is Supply Chain Management?

SCM (or supply chain management) is a term used to describe the broad spectrum of activities necessary to control, plan and execute product flow, from the acquisition of essential raw materials through production to customer distribution in the most cost-effective and streamlined way possible.

Effective management of the supply chain optimises the movement of information, financial capital and materials across all essential areas including logistics, storage, inventory management, production, sourcing and demand planning. Specialist software and efficient business strategies are both leveraged to ensure that the company has a competitive advantage over its rivals in the marketplace.

So, why is supply chain management important for the long-term success of your organisation? These days, SCM is more essential than ever before when it comes to customer satisfaction and company profitability. As an integral component of any business operation, SCM can improve customer service, improve financial standing and reduce operational costs in a number of ways.

Improving Customer Services

It’s only natural that customers want to receive the product that they ordered within the advised timescale. It is absolutely essential to a business’ reputation and long-term profitability to meet that demand, ensuring that the correct products and the right number of items are delivered to the purchaser in a timely manner.

A vital element of this is stock maintenance. Customers will be very dissatisfied if their order cannot be met in time due to a lack of inventory. Also, rapid aftersales support follow-up is another key factor in ensuring customer satisfaction. Naturally, buyers who discover faults and issues with their purchased products such as clothing bought online require speedy action from your support team to rectify the problem. Without appropriate aftersales support, your organisation’s reputation will suffer.

Reducing Operating Costs

Supply chains are essential to distribute expensive products rapidly in order to avoid the expense of long-term storage of expensive inventories. Since delays in production are expensive to companies, it couldn’t be more vital to ensure that materials are delivered in a reliable manner to guard against manufacturing delays.

Improving Financial Position

Supply chain logistics is also essential for controlling and decreasing expenditure on the supply chain. By using the most appropriate transport mode (road, sea and/or air courier), improving freight loads optimisation and decreasing the use of transportation vehicles, warehouses, other large fixed assets, costs can be diminished and cash flow increased thanks to speedy product flow to customers.

Ensuring Corporate Responsibility and Ethical Procurement

In this day and age, ensuring that your company’s reputation is protected from the damage that could be caused by unethical supply practices is essential.

Corporate responsibility is something which is vital to any business, so whether you’re running a small, medium or large-scale enterprise, associating with an unethical supplier is something which must be avoided at all costs. Failure to avoid this association could eventually lead to business failure and financial disaster due to negative customer reactions.

When operating a supply chain logistics internationally, it’s important to keep an even closer eye on the ethical responsibilities and integrity of your supply sources, and this is where effective supply chain management can come into play.

Managing your Inventory

Most businesses rely heavily on their inventory. Even when you’re offering a service instead of products, at some point you will probably need items to be moved through the supply chain, whether that is equipment, consumables or spare parts.

Whenever something needs to be stored and transported, it counts as inventory and must be managed accordingly. The supply chain is vital since it can have a dramatic effect on your cash flow and working capital. When trying to reduce your business’ working capital, inventory management must be handled efficiently in order to make your enterprise more profitable and your customers more satisfied. Effective supply chain management is, therefore, key to this aspect of your business.

Finding Optimal Solutions to Supply Chain Management

No business should just be surviving. Essentially, your enterprise needs to thrive and grow to be successful, and the key to that is supply chain management. Having closely aligned business and supply chain logistics strategies is vital to your profitability in the long-term, so ensuring that you have an SCM strategy in place that will continuously be seeking improvements while maintaining complete control and visibility of costs couldn’t be more important.

Finding the best supply chain management company will ensure that any risks in the supply chain are mitigated and that your inventory is properly managed so that customer satisfaction can be maximised and your company’s reputation preserved.

Although some investment needs to be made in order to ensure best in class supply chain management for your organisation, it is an investment which is well worth making. A complex skillset and in-depth knowledge of the supply chain management industry is required to ensure your business’ success in this area, so getting help from experts in the sector is advisable.

At Xpediator, we specialise in supply chain management, helping companies like yours optimise their strategy and improve their profitability.

Contact our team today to find out more about how we can help you to improve the management of your supply chain and give your enterprise a competitive advantage over its rivals in the marketplace.