Integrated Supply Chain Management article and permission to publish here provided by Tyrone Fisher.
Most businesses are aware how important a supply chain is to operations. However, many businesses miss just how important high quality supply chain management is. To help with that understanding we have gathered 7 ways integrated supply chain management can help your business.
Before discussing the ways that integrating your supply chain management can help your business, we are going to discuss what exactly integrated supply chain management is.
What is integrated supply chain management?
Supply chain management is managing supply chain partners and leveraging opportunities to create value and get products to your customers satisfactorily. Integrated supply chain management then refers to an enterprise resource planning approach.
In this approach a business facilitates relationships with all of its suppliers and manages all distribution and logistics activities through a centralised system rather than having multiple systems within the organization. This should result in higher quality supply chain management.
1. Increase your business output with reliable communication
Integrated supply chain management should open a consistent and reliable communication channel between management, suppliers and customers. This can then be used to ensure the timely delivery of orders. Eliminating delays from the process will in turn increase outputs significantly.
Increased communication will not only eliminate delays but also ensure that fewer mistakes are made. When a supplier has a full understanding of what is needed it will make it far easier for them to provide accurately.
2. Increase your business efficiency by reducing wastages
One of the biggest hits on operational efficiency for a business is resource wastages – from manpower to raw materials. Good supply chain management can help this, as it takes into consideration the best possible efficiency by putting forward only value-added activities.
A natural result of the increased efficiency will help business processes flow more smoothly and ensure that output stays in line with the company’s needs.
3. Focus on the customer experience for better service
The ultimate goal of supply chain management is high quality customer service, and a good supply chain can help ensure just that. Customers expect the correct product assortment and quality. They expect products to arrive at the right location and to be available when needed.
For deliveries customers expect products to be on time. After a purchase customers will also expect products to be serviced quickly. Providing all of this requires good supply chain management.
4. Better collaboration and flow of information
Many companies struggle with information flow. A lack of an automated flow of information across the supply chain can have an impact on lost sales opportunities. Ensuring that you have efficient supply chain management can help make sure that your business gets the lost sales opportunities.
Using integrated software solutions can remove bottlenecks and allow for seamless information sharing, providing a view of the supply chain from end to end. With improved access to data supply chain leaders will have the information they need to make more informed decisions. This will in turn help collaboration between parties across the supply chain.
5. Improved planning for risk mitigation
In good chain supply management an in-depth analysis of big-picture and granular supply data will be done. This will reveal potential risks and opportunities, enabling companies to optimise for the opportunities and to put backup plans in place for any unexpected circumstances.
Being proactive rather than reactive to supply chain disruptions, quality control issues, or other issues can help companies better avoid negative impacts. This understanding and planning for risks will further help companies achieve leaner operations.
6. Reduction in cost of sales
Good supply chain management identifies what is increasing costs and not contributing to the final product. These processes can then be trimmed down or removed entirely, resulting in lower operating costs. Through this a business can decrease purchasing costs, decrease production costs, and decrease the overall supply chain cost.
Adding to this effective supply chain management should result in fewer delivery delays. Delivery delays can cost a business thousands. Ensuring your business avoids these delays and reduces other costs will ultimately help you increase profits.
7. Increase in profits from reduction in costs
A natural outcome of a decrease in costs and an increase in efficiency is an improved profit. All of the benefits of supply chain management allow companies to make better decisions from choosing the right partners to accurately predicting market and demand trends and reducing supply chain disruptions. That improves a company’s bottom line.
Integrated supply chain management can decrease a businesses use of large fixed assets such as warehouses and vehicles. This in turn can help businesses avoid buying vehicles or building extra buildings. Possibly saving the business millions.
Additionally, an effective supply chain can result in speeding up the product to customer flow. This means that the business should have an increase in cash flow. For example, if a business can get products to customers in 5 days rather than 15 days then it can invoice 10 days sooner.
Disruptions in your supply chain have a domino effect, impacting every part of the supply chain. On the opposite side of the spectrum improvements at any point on the supply chain will have improvements on the overall efficiency of the supply chain from the flow of information to procurement of goods and final delivery.
Improving your supply chain management will ultimately help make your business more successful. It may seem challenging or tedious, the time spent on improving and optimizing your supply chain will have benefits far into the future.