Supply chain refers to all the components & processes that constitute the journey from the acquiring of raw materials to their final reception by customers as finished products or services. Supply chain management entails all activities that are executed to coordinate the smooth flow of every aspect in that journey. Managing the supply chain is very important in the quest for fulfilling customer needs & expectations. As every business would know, customer satisfaction is the hallmark of guaranteeing a business flourishes.
The World Is Rapidly Evolving
Increased Demand For Goods & Services
There is now a general increase in human population across the world; this implies that demand for goods & services is relatively increasing. Factor in also the issue of rural to urban migration, thus leading to spikes in urban populations resulting again in increased demand. People are now increasingly participating in commodity-based businesses. This means that demand for commodities is also high.
Globalization
The up surge of globalization has given rise to scenario where a business can now conduct business with a focus on markets quite distant from its base operations. This means there are now increased distances that must be covered. Look at Be Forward; many Zimbabweans are now importing used cars from Japan over vast distances involving air or sea transportation of cargo.
Technological Advancements
With the increased use of automation due to advanced technologies, the average time for a full product life cycle has significantly gone down. Tech has also brought onto the scene digitalization in information sharing & communication. This means that the rate of data & information exchange is now at astronomical speeds. Not too long ago someone would have to travel miles to get to a business site to place and follow-up on orders. Nowadays, however, one can place orders online & follow-up by email and so on.
The Competition In The Business World Is Now Ruthless
Never in the history of humanity have we ever had as many people running & opening businesses as now. Especially due to the proliferation of digitalization & social media, it has become much easier for many people to start businesses. Thus, the competition is now quite fierce; the thirst and scramble for market shares by luring customers is now intense.
With all this in mind it’s clear that if as a business you don’t give serious attention to your supply chain you’ll suffer a crippling scourge. Supply chain plays significantly into the whole aspect of your business’ value proposition. Thus, if you don’t pay attention to your supply chain, your value proposition will suck and that will translate to few customers for you.
Why You Must Manage Your Supply Chain
For most businesses, supply chain is never properly and strategically planned or structured; it’s just left to operate on auto-pilot. Many people don’t realize the colossal importance of managing the supply chain; it definitely must be given adequate attention due to the following:
A Key To Business Success
Surveys have indicated that for most successful businesses, at least 80% of the time the success is attributable to well-oiled supply chains. Profitability is fed by smooth supply chains.
Operational Costs
Generally for a business, the lion’s share of the total operational costs is channelled towards issues to do with supply chain management. Therefore, you can’t afford to ignore such a huge cost by not analysing and assessing your supply chain.
When you get a full appreciation of your operational costs, you’ll be positioned to brainstorm & explore ways of minimizing those costs. A reduction in costs will result in lower pricing for customers and that will have a ripple effect of luring more customers.
Customers
In order to satisfy customers you need to ensure high quality for your goods or services, swift delivery times & accuracy in packaging plus the provision of round-the-clock customer care & support. Managing the supply chain infuses operational efficiency into your business. By guaranteeing all this you enhance customer retention and that plays out well for your business.
How To Reduce Costs By Managing The Supply Chain
The overall goal of managing the supply chain is to reduce costs; the automatic result of cost reduction is increased convenience for the customer who is the key aspect of a business.
You must to a great extent try to reduce fixed physical assets costs. These are things like factories, warehouses & transportation. Managing a warehouse entails a number of costs such as storage, inventory control, security etc. Same goes for having a fleet of transportation vehicles; managing them involves a lot of costs.
You have to address those aspects by incorporating two key things namely, automation & outsourcing. Automation will ensure that the product life cycle is significantly reduced. Then you’ll have to optimize your operations such that there is virtually no waiting period for finished products before they are transported to wholesalers, retailers or consumers. The thrust should be to instil systems where finished products are dispatched immediately upon completion.
As for transportation, you can reduce costs by outsourcing since purchasing, operating & maintaining a fleet of vehicles is relatively more expensive. Therefore, hiring will be a more cost-effective alternative.
Overally, the working principle should be this: Concentrate only on aspects that are core to your area of business expertise; the rest outsource. For instance, if you are running a bleach & detergents manufacturing business, concentrate on aspects to do with the actual manufacturing, then everything else try by all means to outsource from other service providers.
Obviously in coming up with an optimized supply chain you’ll unavoidably have to work in collaboration with various players in different regards. The submissions I highlighted previously on how to reduce costs call for that. There will then be a need to ensure real-time communication & data sharing amongst you and those entities such that the whole supply chain flows in a seamlessly smooth manner.
