Making Supply Chain Management Your Business’ Leverage
Many people do not understand how much they are dependent on their supply chain. Most who are not well versed on supply chain issues believe that it is only to make sure you have sufficient supplies of inventory or raw materials. However, this is just one of supply chain management; the truth is that its scope is much more than that.
To begin appreciating its significance, we must first begin with its definition. Supply chain management is the controlling of the activities from raw materials purchasing to the finished product and to the distribution to customers. This includes not only the movement and storage of items, but also the information technology that enables the integration and coordination of these activities to hasten, predict and monitor delivery and minimize expenses.
Here are just some of the major reasons why having an excellent supply chain management system is critical to survive growing competition:
Lower cost of materials. For many companies, a large part of unnecessary costs are due to inefficiencies in their supply chain. Even before purchasing, there are many wrong decisions that increase costs. It may be that you are carrying too much inventory and have no need to purchase so much immediately. In the purchasing function, there are a multitude of issues that must be resolved. Policies on quality, vendors, price, etc. have a huge impact on the ultimate price you will pay or the quality of your final product, among other things. Also, there is now an international aspect to supply chain management. To be able to compete, one must expand his sourcing to take into account potentially lower cost and/or better suppliers abroad. In this case, one must weigh not only the cost but the many risks of depending on a foreign supplier.
Better information to manage your business. For some organizations, the complexity and volume of their operations require computerized means to manage their supply chain. The use of computers and specialized software has benefits beyond the immediate need. Software vendors have developed business intelligence software that, besides the basic functions, have expanded the scope of the information that can now be gathered. Data mining is now standard and considered as essential by progressive corporations.
Customers are now better informed and more demanding. With virtually everyone having access to the Internet, information about other potential suppliers is easier to learn. If someone is able to deliver a product in a week, while you can barely promise two weeks to deliver, it will be very soon when many of your customers will shift their loyalties.
The result will be the same if you are pricing too high due to higher costs brought about by supply chain deficiencies.
Supply chain management is one of the most important business functions because it can make or break your business.
To know more about this topic, BusinessCoach, Inc., a leading business seminar provider, conducts a seminar entitled, “Supply Chain Management.” Contact (02) 727-5628, (02) 727-8860, (915) 205-0133 or visit www.businesscoachphil.com for details.
Click here to view details of the seminar: Supply Chain Management »
*Originally published by the Manila Bulletin. C-4, Sunday, February 10, 2013. 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.