Are you wondering how supply chains can affect your business or organization? Many organizations don’t pay as much attention to supply chains as they should, which leads to unsatisfied customers and an inefficient business process. Here’s a short guide to help you understand the basics of supply chain management, including key areas to focus on to improve your supply chain.
What is Supply Chain Management?
Before a product reaches a customer, it has to go through several stages, including manufacturing, packaging, branding, and transportation. Usually, several businesses work together to ensure that the product reaches the customer.
Supply chain management is nothing but the management of the transportation of goods that move from organization to organization and then finally reach the customer—and ensuring that the supply of goods meets customer demand. Supply chain management also deals with the information these organizations share with each other. Supply chain managers have to deal with freight quite often, so knowledge of the transportation industry is essential.
Important Aspects of Supply Chain Management
No business strategy is complete without incorporating supply chain management into it. Here are some of the aspects of supply chain management you should consider before planning a supply chain, or improving your existing one:
As a business owner, it is imperative that you open lines of communication for all of the organizations that are connected to yours and are involved in the supply chain, including vendors. Introducing a feedback plan or sending out regular newsletters talking about the organization’s goals help improve the efficiency of the supply chain. It’s essential to build a strong network with these organizations.
An organization cannot survive or prosper without innovation. The same principle also applies when it comes to improving a supply chain. Because supply chains are dependent on multiple organizations, businesses must routinely devise more effective solutions to avoid issues including late arrivals, damaged goods, lost goods, and more. Some of the most famous innovations to arise out of the supply chain industry, according to Supply Chain Digest, include the FedEx Tracking System, the Universal Product Code, and the Ford assembly line.
Efficiency in supply chain management includes both organizational efficiency as well as efficiency in the actual chain. Optimizing efficiency includes optimizing production, packaging, and the handling and transportation of goods in order to save time and money.
Risk management is an important aspect of supply chain management. Because the actions of external organizations cannot always be predicted, these companies present an inherent risk. Supply chain management techniques help plan for this risk and reduce the possible fallout from a miscommunication or other error between different groups in the supply chain.
A number of decisions must be made about inventory management and management of freight. Inventory management involves storing goods as contingency, while freight decisions include deciding which method of transportation will be the cheapest and fastest.
Supply chain management can be a complicated and multi-faceted process; nonetheless, it is a necessary component of any businesses—big or small—dependent on delivering goods to its customers.
About the Author:
This article was written by Bryce Fullerton, a retired supply chain analyst and financial advisor. Bryce hopes to help readers improve the efficiency of their businesses, and suggests researching different Freight Forwarder Companies.
Photo Credit: www.meadewillis.com