Effective Supply Chain Management Is The Hidden Key To Profits
Does your company suffer from either inadequate inventory or a surplus of unneeded items? Is the quality of your supplies substandard or too costly? Or is your warehouse slow to fill orders?
Problems like these waste a lot of resources. They may not be glamorous tasks but their importance is felt in everyday operations. All of these fall under supply chain management. It is essential that management learn what supply chain management is to implement improvement. With an efficient supply chain, a company’s product costs go down and increase in quality.
The scope of supply chain management has been expanding. Below are some of the basic areas of supply chain management and how they impact a company’s operation:
•Purchasing management. Appropriate policies must be developed for vendor selection. Ethical standards (giftgiving, incentives) must be established with suppliers. The ideal number of vendors to maintain should also be decided. Too many vendors may lead to higher costs while too few may leave you with no options in case of a problem with the current supplier. The purchaser must be trained on the best negotiating strategies to get the best price and at the desired quality and delivery date.
• Warehouse management. A warehouse must be organized to maximize productivity. The layout must be planned and the appropriate fixtures and equipment installed and maintained. The fastest moving items should be located in the most accessible areas. The items should be easy to locate and not subject to avoidable damage or spoilage. Consideration must also be given to preventing both external and internal theft.
• Materials handling and transportation. Finding the least costly but timely way of transporting supplies and needed parts must be combined with proper handling to avoid damage. It may be that it would be less costly to just outsource the transportation function to a third party.
•Inventory control. Accurate forecasting of demand is one of the vital tasks of inventory control. An estimate that is too low would result in stock outs. Worse is that it may even prevent the other parts from being used if the missing item is essential to their assembly. On the other hand, too high a forecast would result in too much stock that ties up capital and takes up space in the warehouse. It may lead to high carrying costs due to possible spoilage or obsolescence. The use of information technology is necessary to cope with the needs of inventory control.
Supply chain management is the true secret of world-class companies. Learn more about the many ways it can boost profitability.
BusinessCoach, Inc., a leading business seminar provider, conducts a two-day seminar on Supply Chain Management. Call (02) 727-5628/8860 or (0915) 205-0133, e-mail firstname.lastname@example.org or visit www.businesscoachphil.com for details.
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*Originally published by the Manila Bulletin. Written by Ruben Anlacan, Jr. (President, BusinessCoach, Inc.) All rights reserved. May not be reproduced or copied without express written permission of the copyright holders.