The Advantages of the Supply Chain Management for Small Companies

Small businesses can easily be driven out of business if they cannot offer customers competitively priced products and a quick turnaround time. Because customers expect value for the money they spend on a product, small-business owners can stay competitive by adopting supply chain management practices to manage the flow of goods.

Product costs are determined by factors that include transportation and warehousing activities. When businesses lack effective supply chain management, they cannot keep these costs low. When small businesses adopt supply chain management practices, they minimize expenditures that don't add value to the product, resulting in reduced operating costs. As the cost of doing business goes down, profit increases.

Reducing costs is one approach to increasing profits. Supply chain management eliminates waste during production, warehousing and in logistics. For instance, reduction of shipping costs due to enhanced efficiency results in increased profits. Small businesses also increase profits when their turnover rate increases. When businesses increase their production capacity, they can take advantage of economies of scale in purchasing, logistics, warehousing and production.

The level of efficiency in a small business determines its ability to deliver products whenever and wherever they are needed. Through supply chain management, businesses streamline their supply chains so they are able deliver products promptly. Small businesses use supply chain management tools to reduce processes that consume resources and time and don't add value.

Customers like it when they can buy high-quality goods at reasonable prices, and they expect businesses to deliver goods promptly. Businesses nurture customer loyalty when buyers gain confidence in the company's ability to deliver high-quality goods for low prices promptly. Small businesses are able to grow their operations because satisfied customers are likely to recommend them to others.

For any business to succeed, it has to work with others who perform related tasks. Any uncoordinated relationship results in confusion within the value chain, which leads to incidents of frustrated customers and resentments by some parties within this relationship. Through supply chain management, small businesses can enter into mutual partnerships with suppliers to make it easy to replenish stock.