What is Supply Chain Management ?
Companies like Amazon, eBay, Walmart, and Tesco have made life much easier for the end consumer people like you and me. We have the luxury of purchasing anything and almost everything today and that's only possible because of effective supply chain management. So, what is supply chain management? In the simplest form, it is the process of efficiently delivering the product from the manufacturer to the end consumer.
The Importance of Supply Chain Management in the Business World
What is supply chain management?
Supply Chain Management is the process of streamlining the business's supply activities - product development, sourcing, production, and logistics. The supply chain management is put into action to maximize customer value and achieve sustainable competitive advantage.
The importance of supply chain management
Supply chain management and logistics are critical to the success of any business. It helps a company identify how it's going to get its products from start to finish and what needs to be done along the way. Without a successful supply chain, a company could find itself struggling with missed orders or damaged goods.
These are a few other benefits of supply chain management-
The supply chain management process can be a logistical nightmare
Zip Inventory will help you acquire the skills necessary for success in this field
Online employee scheduling software that makes shift planning effortless.
Try it free for 14 days.
Supply chains reduce costs by delivering expensive, time-saving products without the risk of material shortages. They reliably deliver materials to assembly plants and avoid production shutdowns. For an unexpected part shortage, supply chains can be used as a resource so that it doesn't affect the cost or lead times at all.
Better Customer Service-
Supply chain management can provide direct improvement to your customer service. This is because supply chain processes will ensure that the correct quantity of the exact items gets delivered promptly.
The supply chain management will also let both you and your customer track the orders. This in turn will help you provide better after-sale support.
Supply chain management is important to allow organizations to remain agile and be able to handle any unexpected issue or variability that may occur. By streamlining supply chain processes, businesses can diagnose problems and find appropriate solutions faster than before something that we need in the Covid-19 time.
There are many different factors that can cause supply chain disruptions
Zip Inventory’s comprehensive guide can help eliminate the risk of disruption
Online employee scheduling software that makes shift planning effortless.
Try it free for 14 days.
Improve Financial Position
Supply chain management improves financial positioning by increasing the profit leverage with the supply chain managers controlling and reducing the supply chain cost. If they manage to save even $1 on each item that will lead to a huge profit for the firm selling food packages or cosmetics in billions.
Supply Chain Management also decreases fixed assets costs as the supply chain managers try and minimize the costs by redesigning the network to serve the customers from seven warehouses instead of ten or twelve.
It also improves cash flow with the customers getting a product in seven days instead of 40 days or more. this way the company gets to invoice the customer sooner.
How does supply chain management work?
Supply chain management is a long process, with various stages of product development. To start, the company first comes up with an idea for its product before it becomes reality. They then work on increasingly complex processes to turn that idea into a physical object, including manufacturing and distribution methods until eventually the product finally reaches its final consumer base by way of market demand.
There are five basic components of a traditional supply chain management system-
This is the germination stage of the supply chain model. The companies decide on a product that will meet the end customers' demand.
After the planning, a company works towards sourcing suppliers for raw materials, goods, and services that are required to create the product. Suppliers are a critical component of supply chains. In this process, steps will be taken to monitor and manage relationships with various suppliers.
After raw materials are gathered to create a product, manufacturing takes place. The supply chain managers keep an eye on all the steps involved in the production of that particular model. These include reviewing and accepting raw materials as well as managing manufacturing processes.
The supply chain manager coordinates customer orders, schedules deliveries, and dispatches the loads. The logistics team ensures that a product reaches its ultimate destination by managing freight and warehousing activities.
The responsibility of supply chain managers does not end after getting a product delivered. They need to create a network that supports returning products. Returning can mean either re-producing or scrapping defective goods, or it may simply be returning items to the warehouse for any reason.
Who are the buyers and sellers involved in a supply chain?
Supply chains are a complicated concept, but the simplest way to understand it is that supply chains are composed of two parts- buyers and sellers. In business, buyers and sellers are often referred to as suppliers and customers. The buyer wants products or services from the seller and pays for these items with money. The seller sends the buyer what they have agreed on to receive payment. This cycle repeats itself throughout a supply chain. If a supplier is unable to ship an item, they might send it back to their supplier until they can sell it again.
Why is it important to keep quality consistent for supply chain?
Quality is the most important feature of a product. It goes without saying that a good quality product will always be a selling point for a company. Even an important factor as the price cannot negate the importance of quality.
The importance of quality can be seen in three different ways- perceived, functional, and physical.
Perceived quality- This is what the customer sees and feels when using the product.
Functional quality- This is what the product can do such as its weight or size.
Physical quality- This is how well it's made such as its durability or appearance.
We usually look at every product through these three lenses.
Do small businesses need to care about supply chain management?
Supply chain management is necessary for every kind of business, but small businesses have more chances of benefiting from it. With a smaller team and less infrastructure, small businesses can react quickly if their product needs to change or adjust according to changing market trends.
But before you hit the supply chain management route, you must know these-
Before you make your product, have a plan. Get feedback on what people want and use that to sell products that worked before. Estimate demand for each item and prepare budgets to show suppliers.
Find a shortlist of candidates you will eventually interview. This can be done by checking trade publications, trade associations, professional recommendations, and local business directories to find the appropriate community of suppliers that would suit your needs. Trade shows and organizations such as chambers are also good sources for leads on potential suppliers.
Once you have drawn up your list of suppliers to work with, you can start evaluating them based on their track record, capacity to handle orders, and commitment. You must also check control over their processes and supply chain, financial strength including liquidity as well as positive cash flow that they're in a position to offer.
No supplier will rate perfectly in every single category, so decide what qualities are absolute must-haves for certain business objectives and which aren't as important. For example, a specific quality that is amazing might be the production of clean products at a higher price. Ask for a written quote from such suppliers.
Remember, the lowest price is not always the best if a higher-priced supplier is outstanding in the qualities you most value you.
Plan for Anomalies
When products are produced far away, you have to plan for damage and delays. International suppliers can even have different weather seasons and cultural holidays that can slow production or delivery. Think about how it affects your business before choosing a supplier.
Set Up a Tracking System
To reduce your stress and increase your transparency, create or adopt an easy-to-use tracking system. A supply chain software like a ZipInventory will streamline your business.
Important supply chain trends
To run a successful business one needs to keep up with the trends. Being in sync with changing trends keeps you agile, a need of the hour.
Here are the important supply chain trends of 2022-
The pandemic changed the business world's view on automation. More companies are adopting automation for Logistics and Supply Chain Management today and 2022 will see more serge in this area.
The increase in the automation numbers is due to the technologies efficiency to provide deeper visibility into every facet of the supply chain. This enables supply chain managers to make quicker and better-informed business decisions in real-time. Zipinventory Features make this possible!
Responding to supply chain disruption means more than just sophisticated software. It also requires people with specialized skills, including experience in data analytics and machine learning. Companies today are looking for strategic skills during the hiring process such as these two examples of expertise.
Emphasis on Visibility
Manufacturers have been investing in technologies to enhance Supply Chain Management Process for years. In large part, this has been in response to customers' desire to learn more about where products come from; they want to ensure they are ethically and responsibly sourced. In 2022, the focus on visibility will deepen. Not only will product tracing become more imperative but so will the ability to ensure that suppliers are top-tier and reliable. And nothing will make this easier than Supply Chain Software like
eCommerce and Omnichannel Strategies
The Global Supply Chain Management is changing with manufacturers embracing eCommerce platforms because they make it easier to sell products while warehouses around the world pile up with a product. Companies will focus on diversifying their businesses in 2022 and beyond, as business-to-business marketing becomes more prevalent.
Diverse Supplier Base
Before the pandemic, it was not uncommon for a business to be dependent on one specific supplier for one specific component. Now that we realize this approach can negatively affect product distribution, especially when there is a shortage of certain components in production the Supply Chain Operations Management has taken the diverse route.
Being Agile and Resilient
The focus of global manufacturers will be agile and resilient in 2022. They must have the ability to respond quickly to operational fluctuations, shifts in customer demand, as well as manage unexpected delays while driving continued growth. Something that can be made easier with Supply Chain Management Software.
Manufacturers are trying to keep up with demand and reduce the number of materials they need. This approach, coupled with supplier diversification, is helping them meet deadlines while avoiding bottlenecks.
The trend list first appeared on panorama-consulting.com.