Supply chain management refers to a systemic and strategic management of supplying the goods, products or services that the end customer requires. In simple parlance, it means the system an entrepreneur uses to get his/her end products/services to the end customers and includes within its ambit the process of obtaining raw materials to delivering the final products to the customer.
Supply chain management expert Lewis Daidone says activities include a whole range of activities from product creation and development, sourcing, logistics and even information technology. The main purpose and aim of supply chain management is to create net value for a business enterprise, build a competitive infrastructure and synchronize the supply of goods. At the same time, supply chain management also evaluates the performance of a business enterprise globally and maximizes the use of worldwide logistics.
He states that in today’s global market, it is imperative for business and corporate enterprises to look for production centers where labor and raw material cost is cheap in order to gain the competitive advantage over its competitors. Such enterprises need to adopt innovative strategies in various activities from procuring raw materials from different places to passing the finished products from various locations to the end customers via diverse distribution networks of distributors and retailers.
Importance of Supply Chain Management
Supply chain management plays a critical role in the organization activities of a corporate enterprise and is a vital element to its operational efficiency, which extends to customer satisfaction and ultimate success of the enterprise. Supply chain organization involves optimizing the operation of a corporate enterprise to make the most of speed and efficiency. Speed is critical because customers value fast service. The most effective supply chains deliver products to the end customers fast and cheaply without compromising on the quality. Top corporate enterprises achieve this by employing complex logistic tools like computer algorithms that select best possible routes for product shipping. Large corporate databases also enable employees of these enterprises in distant locations to collect order information and synchronize their efforts in real time.
Reducing prices is the usual way for a corporate enterprise to compete in a competitive market environment but it is not always realistic and practical. The cost of conducting business limits the extent to which a corporate enterprise can lower its price without going bankrupt. Supply chain management provides a convenient way for a corporate enterprise to develop a competitive advantage without lowering prices. By developing an efficient supply chain, a corporate enterprise can deliver its products to the end customers faster.
Other Cost benefits
Efficient supply chain management has a number of other cost benefits. It eliminates redundant steps like those of reducing labor costs by ensuring employees do not waste time on unnecessary and pointless procedures. A more efficient supply chain enhances a corporate enterprise’s negotiation power with its business partners like suppliers, distributors and retailers.
Many top corporate enterprises take the help of Lewis Daidone and have separate departments that are committed to optimizing these enterprises’ supply chain management, which gives them the competitive edge over their competitors. Such enterprises usually have a number of distribution centers across a specific region that allows it to process and complete its customers’ order more efficiently unlike its competitors.