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| Photo by Norma Mortenson on pexels |
Have you ever wondered how that phone in your pocket, the shirt you are wearing, or even the meal on your plate got there? The answer lies in a web of networks called supply chains. Supply chain management is the management of all the logistics of a business and its providers, from acquiring raw materials to delivering the final product to the consumer. But what is the key to having this process operate daily? In this article, we unravel the five critical pillars of supply chain management that ensure a seamless delivery of your goods.
Supply Chain Visibility
Supply chain visibility is the foundation of proper supply chain management. It refers to a holistic and up-to-date view of all factors, ranging from purchase, manufacturing, transportation, and supply. This complete view, if facilitated by advanced technologies like radio frequency identification (RFID), barcoding, and delivery management software like Milenow, allows you to:
easily feature the shipping of products
monitor inventory levels
pinpoint possible problems before they inflate
Increased visibility leads to more informed decision-making and streamlines resource allocation to enhance operational efficiency. In this context, a clear and visible supply chain is crucial for a competitive advantage that helps develop customer trust.
Supplier Relationship Management
Suppliers are essential to the supply chain since they facilitate procurement of raw materials necessary to manufacture goods and services. They ensure a constant supply of material to the production line so that the manufacturing process does not stop.
A good supplier relationship management model begins with the rigorous screening of potential partners. However, it is also important to identify quality or standard, reliability, and deliverability, as well as aspects of sustainability and the costs incurred. Working with suppliers who provide premium-grade products results in a clear value – a better and cheaper supply chain operation.
However, the benefits of supplier relationship management don’t end here. Its core advantage lies in promoting collaboration. This holistic cooperation model goes beyond the goal of gaining the best price. Thus, sourcing professionals and supplier partners can open new frontiers for product innovation, joint creation, and a more flexible approach to responding to dynamic market conditions. In the end, solid and long-term supply chain relationships support supply chain development for organizations and their suppliers, granting a win-win situation within the supply chain network.
Inventory Optimization
Keeping the inventory track from becoming overstocked or understocked is another crucial factor in supply chain management. When stored in large quantities and for a long time, inventory takes up capital and incurs high costs. On the other hand, having too little inventory creates the problem of stock-out and customer dissatisfaction.
Businesses may use approaches like forecasting to address this problem. Along with this, they can adjust the safety stock correctly, that is, have adequate stock to ensure that customer demands are met without having to order ample stocks.
While cost reduction benefits the company's bottom line, it also ensures that customers are offered quality services, thus improving the firm's market position. Moreover, the company can follow concepts like J.I.T. inventory to minimize wastage and enhance its business operations.
Risk Management
Globalization is a reality! Practically all modern supply chains must navigate its ever-complicating landscape. Many factors, such as natural disasters, geopolitical changes, cyber risks, and supplier unavailability, might hinder an organization's smooth operation. Risk assessment and contingency measures are significant strategic assets that any business needs to have to be ready for such difficulties.
This is the only way to be on the right side of the equation to prevent setbacks. Businesses need to:
Consider all possibilities of risk at any level along the entire chain.
Evaluate the level of each risk on a scale of low to high.
Employ the services of several suppliers and employ cloud security.
Develop contingency plans that outline specific actions to identify risks.
Risk mitigation measures also help contain risks and minimize likelihood and impact. With contingency plans, companies can reduce the effects of interruptions to a minimum and continue business operations. In turn, they protect their operations and reputations.
Continuous Improvement
Today, the pace of business is breakneck. Therefore, for supply chains to compete effectively and remain relevant, they have to be dynamic. Constant improvement and innovation are the premise of the overall goal.
This could be described as supply chain flexing. Organizations always need to evaluate and review different activities and establish areas for improvement. This strategy enables the firm to be flexible and adapt to situations in the market as they exist since markets are constantly changing.
Supply chain management is a complex process, but by adopting these pillars and implementing practices, it will be possible for companies to tackle the challenges involved and gain a lasting edge in the current dynamic business environment.
Author Bio:
Rabab Toor is a content manager at Squarepeg and a freelance writer. With a keen interest in technology, the latest trends in digital marketing, logistics, and crypto, she enjoys sharing her insights and expertise on Medium.
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