Why Supply Chain Management is Important for Your Business? (2024)

Authored by: Vijendra Kargudri

Supply Chain Management – what is it? why is supply chain management important?

Simply put, the supply chain comprises a wide range of chain of events from ─ design, planning, procurement of raw material, inventory, execution, manufacturing, to the final supply of the finished good to the consumer. Supply Chain Management (SCM) encompasses optimal execution of all these events through a sustainable, cost-effective, and low carbon footprint catering to the consumers’ demands satisfactorily.

Whether operating locally or globally in a ruthlessly competitive market, no organization in the supply chain landscape can successfully survive over the long-term without SCM in place.

Why is Supply Chain Management necessary? The importance of supply chain management for your business.

The 6 most important reasons for supply chain management are:

Interconnected Supply Chain –

All the stakeholders from the producer, manufacturer, stockist, supplier, to the consumer are the main actors in the supply chain landscape. They are interconnected and constantly ought to be in communication with each other for a product to go through various hands before reaching its final destination. Considerable issues pertaining to the growth of corporations, partnerships, global brand expansion, and outsourcing is dealt with by Supply Chain Management.

Integrated & Co-operative Logistics –

Supply chain management (SCM) is the lifeline of all critical supplies for the existence of all societies. Effective supply chain meets the needs of both producers and consumers and takes an integrated & holistic approach towards management. If operations across different geographies are cooperating and communicating in synergy, this only makes supply chains all the more efficient. This facilitates the logistics to easily manage every part of an integrated supply chain in supplying the inventory backed by more than one entity.

Better Supply Chain for Better Business and why supply chain management is important –

Having an enhanced supply enhances your business prospects & sustainability. Delivering correct product & correct quantity in a timely manner fulfills both producer’s and distributors’ requirements. Likewise, consumers too want to obtain the goods that they want to be delivered to their doorsteps. Since the consumer is the king, having an effective supply chain management provides direct improvement to consumer service. This ultimately leads to better business growth.

Seamless Movement –

A key reason for not being able to effectively deal with potential problems within their business operations leads to a dearth of risk management capability for many businesses. Supply Chain Management streamlines the flow of everything from goods to any unexpected natural disaster. Globally, every organization’s logistics are managed by supply chain managers. With effective supply chain management, supply chain managers can easily diagnose problems/disruptions for seamless movement of goods.

Reduced overall operating costs –

Not just investing in the right areas of your business, but also minimizing extraneous expenditure wherever you can, will help you maximize your ROI. In other words, improving key areas of your supply chain will help you reduce your overall operating costs. This will allow you to minimize purchasing expenses by expediting the delivery of the right amount of inventory at right time to your warehouse and thereby avoid high inventory costs. More so, for a manufacturer, optimizing the supply chain ensures the suppliers deliver crucial parts to the assembly line when required. This helps avoid material shortages, which otherwise can hinder production and waste precious financial resources. Consequently, an efficient supply chain helps minimize delays, which is crucial for maintaining financial efficiency and efficacy. It directly improves your bottom line by expediting product delivery and minimizing the cost involved per consumer and adds to your competitive advantage.

Vitalized quality of life within the warehouse –

Having a good work culture & quality of life within your own business is critical, irrespective of your role as a supplier, a warehouse manager, a manufacturer, or a retailer across the supply chain. Implementing automation and integrating the best practices in your industry will improve your supply chain. This will optimize handling, storing, and picking times for all goods, and will significantly minimize the risk of error in the warehouse, and beyond. Thereby, it will effectively vitalize the overall quality of life of the workforce within the warehouse and in turn, improve the bottom line of your business significantly.

Improved visibility for Supply Chain Operation –

One cannot run a business blindly. Visibility across the Supply Chain has a far-reaching impact on the success of a business. Lack of synchronization in workflow often ensues when the workforce in an organization cannot comprehend the ongoing activities a level below or above their own position in the supply chain. With SCM in place, visibility & transparency across every stage of the supply chain is increased. It helps create opportunities for the workforce across various departments to collaborate and make informed decisions.

Bonus Read:

Do you still have questions about what is supply chain management and why is it important? Krypt Help your business!

Krypt is a preferred SAP partner and has helped global organizations successfully implement/integrate SAP TM, SAP IBP, and SAP EWM.

We improve your Supply Chain Management capabilities through the implementation/integration of SAP TM, SAP EWM, and SAP IBP. Our services and products will help your business have an edge over competitors through advanced planning & scheduling. We empower your business through time-saving seamless operations, greater agility in updating ever-changing priorities, efficient production schedules, and inventory plans.

To know more about our other products/services, please request a DEMO or do contact us.

Follow us on:

Image Credit: Pixabay