Why is Supply Chain Management Important?

Supply chain management implies a well-managed and organised procurement function. In actuality, procurement is usually a collection of disparate suppliers chosen almost randomly based on a recognised ability to deliver goods at a price that seems right. While this might be a bit of an overstatement, it’s true that in many instances, companies make little attempt to organize their suppliers or implement coherent supply chain management policies.

What many don’t understand is that a notable percentage of their total costs are tied up with the supply chain, particularly for those businesses that outsource manufacturing. These include:

• Overhead costs linked with managing suppliers
• Cost of fixing quality management issues
• High inventory levels in event of undersupply
• Logistics costs
• Lost sales from late shipments
• Supply chain inflexibility and long lead times

Conversely, companies that build, streamline and maintain their supply chains management benefit from lower direct and indirect costs. This leads to enhanced revenue and answers the question, “What is supply chain management and why it is essential for your Business?”

Supply Chain Management Definition

The term supply chain management (SCM) covers all the exercises associated with managing a business’s procurement with the goal of:

1. Reducing expenses
2. Improving productivity
3. Satisfying demand

Important Aspects of Supply Chain Management Strategy

While each business has its unique supply chain strategy, several basic elements need to be viewed. These include:

The supply chain network structure:

This considers physical structures, such as manufacturing plants, warehousing, outlets, and client locations, as well as logistics and the organizational knowledge as to where and how each is built and maintained.

Legal and ethical standards:

The description of legal standards associated with acquirement along with relevant ethical measures to ensure the business complies with its corporate responsibility and environmental commitments.

S&OP policies:

Because the supply chain doesn’t operate in a vacuum, judgments and plans should align with the corporate philosophy and be presented in the same financial language.

Supplier profiles:

The plan should determine who the company does trade with and need some systems to be used by suppliers to manage product quality and deliveries.

Call E2E Qatar Logistics for Supply chain management. Your logistics needs will be trouble-free and seamless. Alternatively, you can chat with our staff online or send a form. Our expert will be able to contact you immediately with an estimate. If you are in Qatar, calling our direct number +974 5599 064 or mail [email protected] is the best option.

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