3 Reasons why Supply Chain Management is Important?

Estimated reading time: 6 minutes

<Why Supply Chain Management is Important>

Supply chain management is important because it increases customer satisfaction & competitiveness. The success of the business links inextricably to the performance of their supply chain. A survey by done Deloitte showed that 79% of companies with high-performing supply chains achieve revenue growth superior to the average within their industries. Effective supply chain management in an organisation improves the efficiency of the plant, warehouse and transportation which provides them a competitive advantage. We will look into primarily 3 reasons-

• Reduces Operating Costs
• Improves Customer Satisfaction
• Improves financial position

Reduces Operating Costs

Organisations rely on their supply chain management system to quickly distribute costly products to avoid sitting on expensive inventories and save operating costs. Any delay in production can cost a company tens of thousands of dollars. Reliable delivery of materials to assembly plants avoids any costly delays in the production of the organisation. Wholesale manufacturers and retailer suppliers depend on proficient supply chain management to design a network that meets customer service goals. Dell has one of the most efficient supply chain in the business. Their revolutionary computer supply chain approach involved making each computer based on the specific needs of their consumer, shipping the computer directly to the consumers. Dell was able save millions in inventory costs. 

Improves Customer Satisfaction

Customers have now become more demanding than ever. They expect retailers to have the right quantity and quality of stock. The use of e-commerce websites has risen significantly which has increased the order of items online. Consumers expect prompt, on-time delivery and easy return processes for unwanted purchases. Many manufacturers are dependent on just-in-time (JIT) manufacturing strategies that require delivery of components not only on time but also not before time, and in exactly the required quantity. Having this strategy improves  customer satisfaction.

Improves financial position

Effective SCM helps businesses and retail to quickly deliver products and avoid storage costs as much as possible.  Supply chain managers help minimise costs from the use of large fixed assets such as plants, warehouses and transportation vehicle. Firms appreciate the added value supply chain management contributes to the speed of product flows to customers. It lowers the costings of the business & hence improves the financial position of a firm and enables them to be more competitive in the market place.

Supply chain management streamlines everything from product flow to unexpected natural disasters. With an effective SCM, organizations can diagnose problems and disruptions correctly. SCM plays an important role in moving items quickly and efficiently to destination.

Blog – Benefits of Benchmarking in Supply Chain Management

Supply Chain & Commercial Contractual Management is a 3-day course held from 21-23 October (Kuala Lumpur). This course has been specifically created to empower and add value to the delegate through the understanding of how relationship between commercial contracts and the management of supply chain is fundamental in enabling streamlined and effect processes and the procedures within the areas such as the procurement; inventory management; lead time management and stakeholder management. This programme is designed to be an immersive experience with emphasis on open continuous discussion; problem solving and class exercises.

Supply Chain and Commercial Contractual Management 21-23 Oct 2020, KL