Supply Chain Management (SCM) is the system that connects and integrates the links of logistics management, sourcing, procurement, and conversion of any business. By integrating critical business functions — you can raise profits, reduce risks, optimize costs, and understand how to manage the intricate business systems. Managing everything has a positive impact on any business, as it can make your customer and business happy by keeping the performance high.
Happy customer = Happy Business = Higher Performance
No matter the size of the business, all successful companies endure SCM as an essential part of their company or organization. Supply management is the conduit whence all inventories flow. Within this journey, it’s ensured to maximize the customer value and also maintain/achieve a sustainable competitive advantage.
SCM, under its umbrella, covers areas such as planning, design, execution, and control of business operations. Businesses can analyze supply chain activities to create net value, sustaining a competitive advantage, leveraging global logistics, and many more. Overall, there’s no reason to believe that supply chain management is not essential to any company or operation.
Note: According to a McKinsey report, the logistics sector in India comprises 14% of GDP, which is much higher from 8–9% of countries like Europe or the US.
Importance of Supply Chain Management
The main reasons for the importance of supply chain management include the following:
● Interconnected Supply Chain: Our world can also be viewed as one significant example of a supply chain. Producers and consumers are consistently communicating with each other, and the product goes through various checks and hands before reaching their final destination. SCM is a valid option, which can manage substantial issues on the growth of partnerships, corporations, outsourcing, and global brand extension.
● Integrated and Collaborative Logistics: Effective supply chain management tends to meet the demands of both consumers and producers with an integrated approach towards management — consequently, its a necessity for the foundation of all societies.
● Better Supply Chain Includes Better Business: For obvious reasons, an improved supply chain can grow your business. Reliable supply chain management can provide customer services with direct improvement. The right product and quantity have to be delivered on time to appease both producers and vendors. Consumers desire to know the exact location they must go to obtain the goods they require. A better supply chain will lead to better business within the company.
● Momentum: Supply chain management streamlines everything from merchandise flow to even some unexpected disasters. Many organizations lack risk management due to not being able to take care of potential problems efficiently. With effective supply chain management, organizations can diagnose disruptions and concerns accurately.
Implementing and optimizing a supply chain can undoubtedly transform a number of struggling processes in any supply chain. Also, leveraging technology, data visibility, and proper demand planning can help turn a failing supply chain around and keep it competitive.
