Regardless of your business’s scale or industry, one truth remains – you can’t do everything on your own. You need to get your products – as well as several additional services – in order to operate at your best.
Today, companies do a great deal of work to optimize their performance and deliver at their best. However, it doesn’t mean much if you’re unable to control how your raw materials and even your products move from place to palace.
This is why supply chain management is so key. Essentially, the supply chain discusses everything that needs to move from place to place for your company to perform as it should. You need raw materials coming in, and you need to get your product out to your customers. All of this needs to be streamlined and managed effectively if your company is to succeed.
Below, we’ll look into the importance of supply chain success and how it contributes to the overall growth and success of your business as well.
Growth in customer service
As a business, you should always know that your customers expect accuracy from you. They want a precise assortment of products and the right quantity of products to be delivered when they make orders.
Customers also want their products to be delivered when and where they want. If a person orders a pizza to be delivered for 5 PM at their house, then you need to find a way for that pizza to get to them for 5 PM.
With effective supply chain management, you can deliver on your customers’ expectations. You can meet their needs and ensure that their deliveries are as accurate as possible. This eventually boosts your profile in front of the customers and ensures that you always get a callback. So, as you work on getting new customers, you’re comforted by the fact that your existing customers will remain with you.
Supply chains are also great because they can scale with your business when designed well. If you have the right supply chain channels, you won’t need to do much work as your company grows bigger and your customers increase. You will be able to integrate them into the system and expand as you need to.
A reduction in operating costs
Supply chains are also important to retailers as they look to quickly deliver products and avoid having to pay expensive holding costs for inventories. For most warehouses and stores, storage costs go even higher when the holding period is longer. An effective supply chain system ensures that you can get your products out and moving as quickly as possible, so you don’t have to make any additional storage payments.
Manufacturers also use supply chains to deliver materials to assembly plants, thus reducing material shortages that would otherwise hamper production. Delays in material shipments could easily cost thousands to rectify – and possibly millions in lost wages. A proper supply chain management system will help to avoid these losses.
Most IT transformation consulting firms will recommend that you use technology to optimize your supply chain routing as well. This will help to reduce churn and redundancies, so you can deliver products even more quickly. However, at their core, supply chains will be effective in helping you to save money.
Optimizing your financial position
Effective supply chain management will also be effective when it comes to improving your financial position. For one, it helps to reduce your reliance on fixed assets like transportation, warehouses, and plants. If a supply chain system can help you to use six warehouses as opposed to ten, you will avoid having to pay for four overly costly buildings. So, you start to improve your finances from there.
There is also the ability of supply chain systems to help you to speed up product flows to customers. If you can deliver a product to someone much quicker, you get to invoice them sooner and get paid. Time is pivotal in running a business, and a great supply chain will help you to save a lot of it.
Besides the important profit and performance advantages that you get from supply chains, success with this business facet can also come with some impressive social benefits.
One area where supply chain management comes in handy is in reducing environmental pollution. Today, supply chain activities rely heavily on product movement and packaging. Due to these activities, significant environmental pollution has been generated. This contributes to the growth of landfills, waste mountains, and more.
An effective supply chain management system will address environmental pollution, reducing waste resource use, and ensuring that your channel is as green and clean as possible. It is worth noting that there is still a lot of work that needs to be done to make supply chains green. But, for now, they remain pivotal in the race to reduce pollution.
Another social benefit is the reduced use of energy. Supply chain activities require the transportation of humans and products, using up significant energy in the process. When you can streamline your supply chain channel, you get to optimize your resource and energy use and reduce waste.
Reaching out to customers everywhere
If you’re in the retail business, it goes without saying that you will be able to get much more returns from customers than you would have decades ago. The opportunity to reach even more people without doing so much work is quite alluring. However, you also need to have the right systems in place to reap these returns and reach out to these people.
The entire point of supply chains is to help your business operate and grow. But, managing them right is the true key to expansion.