Supply Chain Management: Is it Important for your Business?

One of the most basic, yet important to consider the importance of supply chain management in your businesses. How it can ease up the processes smoothly and what are its types in businesses and how it can help even after the occurrence of unprecedented pandemics like Covid-19 and in natural disaster like flood etc .

Supply Chain Management: Is it Important for your Business?
Importance and Types of Supply Chain Management

Supply chain involves every aspect of business operations including how goods and services evolve right from the idea creation to the finished product. It includes active streamlining of business’s processes including logistics, purchasing, and technology to maximize customer value and gain a competitive edge in the marketplace. In other words, it refers to the full management of the flow of services and goods including all the operations resulting into final products. Supply chain management is important as it helps companies cut excess costs and deliver products to the customer on-time and efficiently. It helps businesses achieve various objectives, improves product quality, reduces the risk of recalls, controls shipping procedures, enhances customer service by avoiding huge costs, shortages and gaps in inventory oversupply. SCM provides several opportunities for businesses to surge profit margins and is especially necessary for companies with international operations.

Supply Chain Management Flow

Types of Supply Chain Models

Every business is different with its own goals, strengths and constraints that makes its SCM process different from other companies. There are six distinct models a company can adopt to guide its SCM process:

  1. Continuous flow model: This is one of the traditional methods and the most suitable for mature industries. The continuous flow model is basically based on a manufacturer producing the same goods every time and expecting a change in customer demand.
  2. Agile model: Companies with unexpected customer demands and those who prioritize flexibility use this model. This model demands the companies have a specific need at any given moment and must be able to work accordingly.
  3. Fast model: Companies use a fast-chain model to meet the demands of customers in a short life cycle. The companies using this model follow a particular trend, quickly producing goods and have the aim to quickly sell them before the trend ends.
  4. Flexible model: Companies with seasonal requirements like high demands during a peak season and low volume requirements in others.
  5. Efficient Model: for companies competing in the marketplace with stringent profit margin, may try to ensure they get the benefits by making their supply chain solutions more efficent.
  6. Custom Model: Companies with special requirement which are unable to meet any of the above models, choose a custom model. They curate their own supply chain tracking mechanism, equipments and inventory management processes to best meet the objectives.

Supply Chain Model

Importance of Supply Chain Management

Supply chain management has been an indispensable part of a company and is pivotal to any company’s success. From decreased costs to greater efficiency and improved financial position , SCM has the power to lead businesses to great heights.

Higher Efficiency

The effective strategies employed in SCM, helps improve the flow of products, information and materials. It improves the efficiency of the companies by analyzing the demand and sales forecasting.

Reduced operational cost

Effective SCM helps minimize costs by analyzing real-time data and monitoring financial inflows & outflows in the business. It also helps decrease the production, purchasing, freight shipping and container tracking costs.

Risk assessment and mitigation

Supply chain is the best way to perform predictive analysis which offers end-to-end visibility that helps detecting the issues and mitigate risks. This way businesses can take corrective actions to enhance accuracy, efficiency and flexibility across different production and freight forwarder practices.

Enhance customer experience

Supply Chain Management is pivotal to effectively manage and execute the operations to assist businesses enhance customer experience. It is pertaining to driving better customer services by responding to their requirements in real-time and providing on-time delivery.

In this digital transformed era, businesses are highly dependent on a well-versed supply chain strategy. For optimal execution of all events and allowing organizations to keep real-time transparency, supply chain management is important.