5 Key Benefits of Effective Supply Chain Management

What is Supply Chain Management

Simply put, supply chain management is the active management of a supply chain’s numerous moving parts with the goals of maximizing customer satisfaction, reducing costs, and gaining a competitive edge. In the past, each issue in a supply chain was handled by the people who had direct contact with it. Today, the supply chain is correctly seen as a network of interconnected parts that collaborate to produce and deliver goods to customers precisely and quickly.

The objective of supply chain management is to simultaneously satisfy customers and stakeholders. This means that a successful supply chain management process makes money for the business while delivering goods to customers in a timely and effective manner.

Here is an explanation of supply chain management and some of its main benefits.

1. Enhanced Customer Satisfaction

One of a facility’s main goals, particularly in e-commerce, is customer satisfaction. Customer satisfaction is greatly influenced by supply chain management, which makes sure businesses can keep their word to clients and deliver goods on schedule. 69% of customers say they are much less likely to do business with a company again if a finished product isn’t delivered within two days of the scheduled delivery date.

Supply chain management is essential to reducing the time between placing an order and when it is delivered to a customer or the total order cycle time. A more efficient supply chain can reduce your total order cycle time while a more inefficient one can increase it and harm customer satisfaction and retention.

2. Stable Inventory Control

The efficient operation of a warehouse depends on effective inventory management. Inventory tracking can increase inventory visibility and accuracy when done correctly. This has several advantages, such as:

  • Keeping orders from shipping late: A third of businesses (34%) have had to ship an order after discovering it was out of stock. Inventory visibility, a crucial element of supply chain management, aids in the prevention of this kind of error.
  • Reducing the total order cycle time: Delivery times of placed orders will suffer from poorly managed inventory levels. Supply chain management speeds up product delivery to customers and helps throughput times.
  • Enhancing predictability: To guarantee a positive customer experience, it is essential to be able to forecast how much inventory will be required in the future based on historical trends and seasonality. The supply chain management process heavily relies on forecasting an organization’s peaks and troughs, which aids in deciding when to increase inventory levels in response to rising customer demand.

To reduce the risk of late deliveries and increase customer retention, effective supply chain leaders will give inventory management top priority in their supply chain operations. They are able to beat facilities with poor inventory accuracy due to this.

3. Enhanced Quality Assurance

An essential component of supply chain management is quality control. To guarantee a constant level of product quality, supply chain professionals should incorporate routine audits of their suppliers and raw materials into their supply chain management procedure. This is advantageous for both the facilities and their vendors as it can highlight potential areas for improvement and give them the chance to make corrections before doing so with other facilities.

4. Lower Prices.

Although overhead and operating costs are an inevitable part of running a business, supply chain finance experts aim to reduce costs and boost returns. Your facility will incur more expenses if your supply chain is not managed well. To cut costs and increase profits, you must make sure the product management process runs smoothly from beginning to end.

5. Increased Labor Efficiencies

One of the most important issues facing modern warehouses is labor. With more people leaving the warehousing sector than entering it, there are more jobs available than ever before. Additionally, 71% of facilities usually need more than a month to properly train new employees.

The ability to automate the process is one of the main advantages of supply chain management. It assists in determining the right amount and timing of automation for a facility.

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