Regardless of the company’s size, supply chain management (SCM) should be a priority for all executives to improve their chances of success. According to Planet Together, the importance of supply chain management includes the following.
- Reduced costs – Supply chain managers often focus on reducing the costs incurred at all steps within the supply chain. Supply chain managers can attempt to reduce costs further by improving production processes, relationships with suppliers, and inventory management. The overall benefit of reducing costs throughout the supply chain is increased firm profits. Even lowering the cost of items by a few cents can result in millions of dollars saved if you.
- Interconnected supply chain and logistics – Supply chains can appear like independent strings of a few companies working together to reach a common goal of delivering products to consumers. However, it is much more complex as the world can easily be viewed as one large supply chain. Consumers, distributors, producers, and suppliers are consistently communicating with each other as materials and components are transformed into finished goods that ultimately end up in the hands of consumers. Therefore, supply chain managers must focus on visibility and communication between all components and on the growth of their organization, partnerships, and outsourcing.
- Information transfer and communication – Supply chain management is a necessity for the foundation of all societies. Effective communication and information transfer in real-time is a necessity for the foundation of a robust supply chain. This starts by building strong relationships between all supply chain components and ensuring that communication is accessible and that all parties are aligned towards a common goal. As information flows backwards from the end-consumer to the supplier, supply chain managers must reduce any delays or errors in the knowledge transferred from one chain link to another. Many modern manufacturers rely on advanced technology that can increase the visibility of order statuses to consumers and suppliers in real-time to meet everyone’s needs.
- Better customer experience – Effective supply chain management can improve your customer service. This is because SCM processes will ensure that the correct quantity of the right items will be delivered promptly. An interconnected network of suppliers and distributors will reduce delays and improve customer satisfaction. In addition, supply chain management will usually increase visibility and allow both customers and customer service personnel to know each order’s status at all times.
- Agility – Supply chain management is important to allow organizations to remain agile and handle any unexpected issue or variability. By streamlining supply chain processes and increasing visibility, businesses can diagnose problems and find appropriate solutions more quickly.