What are the five most important factors of supply chain management?

Few companies are able to switch from the day-to-day tactical fight that supply chain management involves to getting ahead of the curve.

But before we delve into how to get ahead, we’ll give a brief overview of what exactly supply chain management is. 

What is Supply Chain Management?

Supply chain management integrates a number of elements, including operations management, logistics, procurement, and IT. By integrating these various elements, companies are able to manage the flow of their products and services, from the raw materials to the finished product, though the pipeline, and to their end client.

When a company is able to properly design, plan, implement, execute, control, and monitor their supply chain through interlinked systems, they can create value, increase their competitiveness, and attain more leverage.

The above key aspects of supply chain management are beyond the rather simplified approach of daily supply-and-demand tactics. They are targeted at improving standard approaches of supply chain management to get ahead of the curve.

1.  Demand Management

Demand management isn’t solely about filling orders, it is about understanding and anticipating your clients needs based on prior analytics. Anticipating demands and understanding needs allows for better stocking while offering added value for the customers.

2.  Communication Management

Communication in the supply chain system isn’t about pouring communication on top of the process, since that would be superfluous and slow everything down. Instead, it is about managing communications in an effective way that keeps all needed members informed without delaying the process. Proper communication management enables a company to be more agile and prepared for changes to the pipeline and market demands. Properly managed communication can also empower companies to release new products more effectively.

One example of intelligent communication management is the creation of a supplier-feedback loop. This feedback process, when executed properly and regularly, can ferret out business viability issues further down the pipeline, uncover supplier challenges, and identify new opportunities for growth and improvement.

3.  Partner Integration

By integrating systems with suppliers and vendors you can more accurately predict fulfillment times, bring products to market more quickly, and possibly offer more competitive pricing to the end client. Despite having different and closed networks, companies can integrate their supply chain systems via open internet protocols, single-information networks, and collaborative tools.

4.  Prediction Analytics

While supply chain management has always been a battle of slower fulfillment times versus predictive guesswork, new analytics have enabled us to intelligently predict fulfillment based on historical trends and market growth projections.

5.  Leverage

With a well-oiled supply chain management system, companies, especially those that have experienced organic growth, can better leverage their size to improve their profitability. These savings can be used to fuel added growth through more competitive pricing, or to grow the company. Leverage is a concept that needs to be re-evaluated regularly, based on growth patterns.

How to Get Results

You’ve already taken the first step by researching the topic. Next, give us a call or send us an email. Together, we can plan the right hardware and software implementation to step up your supply chain management efficiency.

It’s no secret that supply chain management has paved an effective way for timely deliveries, improved financial performances, greater customer satisfaction, building trust among suppliers, etc, all of which improve an organization’s performance in the long run.

But as much as a supply chain helps in achieving a positive result for our business, it is important to work on the factors that can direct your company’s results in other ways than usual. So, we’re listing below some major factors affecting supply chain. These factors have the tendency to affect any effective supply chain management system:

Environmental Uncertainty
All environmental issues of a product chain including unexpected changes of customers, suppliers, competitors, and technologies have an impact on supply chains. The support of the government and uncertain aspects from overseas also play a vital role in shaping the success of your business. A company environment relates to the company’s expectations of quality, timely delivery, competition, and the level of rivalry among firms.

And in order to effectively handle demand and attain flexibility, companies resort to importing, which can affect negatively due to its uncertain nature. However, you can reduce its overcome by establishing strategic relationships with critical suppliers. The level of support your company receives from the government for imports also plays a crucial role. This includes norms, regulations, policies, and advice from the government whose reforms encourage exporters by increasing the manufacturing sector’s competitiveness in the international market through logistics competency. Talking about environmental uncertainty, acknowledging the existence of an uncertain overseas environment also becomes a huge factor to supply chain management systems as it increases your risks with issues like language barriers, transportation, transportation costs, exchange rates, tariffs, and administrative practices.

Information Technology
Technology today allows all supply chain stakeholders in staying connected in real-time. It reduces lead time, paperwork, and other unnecessary activities, all of which benefit managers in coordinating, accessing information and data interchange, improved customer and supplier relationships, and inventory management. Different tools from the IT also help in executing and managing warehouse data, vendor managed inventory, distribution requirement planning, and customer relationship management.

Supply Chain Relationships
What is an effective supply chain without strategic supplier partnerships and successful customer relationships? After all, that is what ultimately benefits organizations by coordinating and integrating activities with suppliers and understanding a customer’s needs. All companies are inclined to work with different suppliers indirectly which is why it is necessary that your relationship with suppliers satisfy the mutual needs of your company and the suppliers’s.

Manufacturing
In today’s generation, the key factor that implicates the success of products is smart manufacturing. There are two main factors that add value to your products: flexibility and quality. That’s because complex markets, fierce competition, and fast changes in demand require you to be ready to react promptly to customers’ needs. At the same time, you’ve got to understand that quality is not a bonus for the customer but an expectation. High costs, low productivity, and loss of market share have always been directly related to poor quality. So, think and act wisely.

Supply Chain Management Performance
SCM comprises of logistics, supplier markets and performances, and material sourcing, all of which define the operational excellence of delivering a leading customer experience. While logistics must be focused on the coordination and collaboration of activities, logistics social responsibility, strategic distribution planning, and technology and information systems, a superior supply chain management requires significant information with respect to supplier markets and their performance which is usually higher when supply managers perceive trust and satisfaction.

Business Management Business Management consists of leading, planning, organizing, monitoring, and controlling all people and activities in a company to achieve objectives and goals. It caters to fast changes in customer demand, globalization of markets, and the changing technology to improve competitiveness and to

achieve customer satisfaction. Process strategies, process performances, marketing strategies, and innovation, all have a role to play in the supply chain of any organization.