To enhance your company's productivity and efficiency, as well as the overall bottom line, it’s important to focus on supply chain management, or SCM. Supply chain management is a collaborative approach to getting the goods or services from your company to consumers. Several goals and objectives of supply chain management help you gain a competitive advantage in your marketplace: collaborative efficiency, optimized logistics, quality improvement and long-term stability with an overall outcome of creating a supply chain that is as productive and profitable as possible.
What Is a Supply Chain?
A supply chain is the connected network of individuals, organizations, resources, activities and technologies involved in the manufacture and sale of a product or service. Your company’s supply chain starts with the sale and delivery of the raw material necessary for production and ends with the delivery of the product or service to the end consumer. Because there are so many steps along the way, SCM allows you to look at each step of the process to make sure you focus on efficiencies and aren’t losing value. The end result is getting a better product or service to the consumer more efficiently.
Supply chain management can become increasingly important to your organization as global markets and networks expand. Through supply chain management, you can boost customer service, reduce operating costs and improve your company’s financial position. Supply chain management can also have a larger global impact, such as reducing pollution and energy consumption and assisting in distribution of goods in a disaster situation.
Managing inventory, transportation and logistics can be complex and costly for your company if you don't have an effective SCM system. When manufacturers, wholesalers and retailers collaborate on a supply chain system, it is easier for your company and your partners to ensure efficiency. For example, you could share inventory data with your supplier and vice versa. This allows for fast replenishment of inventory to meet customer demand. That efficiency in getting goods to the right place at the right time minimizes inventory costs and meets customer demand.
Optimized Transportation and Logistics
A key component of supply chain management is addressing transportation and logistics within your company. In an independent business environment, each company is responsible for its role in ordering, shipping and transporting goods, but costs are high and timing is poor. With supply chain management, you, as the vendor or buyer, can plan optimized transportation and logistics activities with the vendors and buyers you work with. Orders are automated between a reseller and a vendor, and vendors quickly pull, ship and transmit orders to buyers for clear communication.
Keep in mind that providing consumers with the best value is a goal shared by you and your supply chain partners. The more closely connected you are with those partners, the more likely you are to improve the overall quality of the consumer experience. Retailers, as the most direct link between consumers and goods, are the ones who often hear feedback about product quality. In a collaborative supply chain, create a system for those retailers to communicate customer feedback to your company and to other partners in the supply chain. This invaluable feedback enables you to address any issues or deficiencies and to focus on constant improvement of products. It’s a win for all those involved in the supply chain because consumers recognize and appreciate value.
By forming strong trusting supply chain relationships and working toward best practices in distribution, your company can aim for long-term stability. Collaborative planning, coordination and distribution activities spread the risks of business decisions across multiple companies. As your organization and those you work with look for improvement opportunities, a common result is stabilization within your industry. Shared interests in meeting customer needs also cause you and other companies within your supply chain to communicate about optimizing distribution systems.