What is Supply Chain Management and Why Is It Important?

As the processes for receiving materials, manufacturing products and delivering them expand to include new methods and technology, efficient supply chain management is more important than ever to meet consumer needs. GBSB Global points out that processes that once took months are now expected to be complete in days and hours, even. Meanwhile, the supply chain is becoming increasingly complex due to globalization. But what is supply chain management exactly, and why is it important?

What Is Supply Chain Management?

Supply chains are vital to businesses seeking to provide customers with their products. Supply chain management includes the collection of materials, the manufacture of products and the delivery to the consumer. It seeks to discover and use the most efficient and least expensive ways to supply product; therefore, as the system becomes more detailed and complicated, the business has more options to choose from. The best strategies require eliminating unnecessary processes and shortening turnaround time for products so that the business remains cost-efficient and results in customer satisfaction.

Why Is Supply Chain Management Important?

Reduce Costs & Improve Finances

Businesses can reduce costs at a variety of levels in the supply chain. Buying raw materials in bulk could increase discounts while retaining fewer products in warehouses and predicting consumer demand can decrease the likelihood of holding onto expensive assets and paying to house their inventory. Eliminating processes can reduce costs but also decrease delivery times and increase the cash flow by minimizing the number of steps required to complete a full transaction. Any expenses that a business avoids can increase profit without increasing product prices and puts the organization at a competitive advantage by allowing customers to get higher quality products faster

Customer Service

As customers expect faster delivery times and better products, it is essential for businesses to meet those demands by ensuring their supply chain delivers the correct products in the correct quantities. That means that products must be readily available when and where they are needed. Customers also expect better support after their purchase, requiring businesses to offer warranties and repairs in a reasonable amount of time.

Sustainability & Corporate Responsibility

Businesses can further utilize supply chains to encourage energy-efficient and sustainable practices and processes by replacing steps that are wasteful and energy-consuming. Not only do these responsible behaviors garner support from eco-centric consumers, but it can also be cost-effective to avoid costly packaging solutions that cause environmental pollution. Overall, supply chains that use fewer resources are more sustainable and less expensive.

Facilitate Information Sharing & Respond To Market Uncertainty

Information sharing within a business provides much more efficient supply chains because there is more knowledge to make important decisions. Supply chain management that is based on complete knowledge creates opportunities to predict outcomes of business risks during uncertainty and better react to new changes as well, leading to advantageous competition and market development.

Supply chain management is necessary not only for getting customers their products, but also for supporting medical missions and emergency response operations that get patients, victims and communities supplies that their lives could depend on.

Those best-suited for working in supply chain management have excellent analytical and communication skills and are adept in resource development necessary to coordinate with a variety of vendors and suppliers. Read more about the skills and education required to succeed in this field here.

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