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A supply chain system is typically made up of the supply chain management software, hardware that powers the systems, planning, execution, and numerous other things. Generally, companies make use of the Supply Chain Management software that enables businesses to manage their inventories and schedule production accordingly, keep a track of their sales records, handle payments efficiently, and also track the real time location of their shipments. The business can then use this data to communicate with other parties. Moreover, the inventory or demand prediction derived from inventory management practice is the main part of the SCM software. However, understanding the development of a supply chain is an important aspect but it is quite different from its execution. Successful SCM execution, on the other hand, can help you in creating a vast advantage over your competitors. This execution mainly focuses on the system analysis, strategic planning, implementation of supply chain, and coordination.
The global supply chain market is estimated at an approximate value of 18,700 million USD in 2020 which is expected to grow at a CAGR of 11.2% and reach up to 50,000 million USD by 2027. However, the actual figures can be much higher since there has been an increase in demand for SCM after the supply chain disruptions triggered by the COVID 19 pandemic. The pandemic was estimated to impact the supply chain but has in turn fueled the growth of the SCM industry.
Objectives of Supply Chain Management
In today’s time, the Supply Chain Management system is often termed as the backbone of any business organisation. It is believed that businesses who follow supply chain management principles provide much greater value to their customers than those who have not integrated supply chain management concepts into their operations. Some of the most common goals of supply chain management are as follows:
With efficiency, supply chain management focuses on reducing the wastage of any business resource which in turns improves the overall efficiency of the business. This wastage of resources can include the wasted money, materials; an individual’s working hours, delivery time and a lot of other things. The supply chain management system focuses on minimizing wastage by controlling manufacturing, inventory, transportation and logistics, on the basis of the nature of the business. It helps in improving the systems and eliminating all the leakage from the existing working systems. Keeping a track of your inventory and updating it in real time with respect to your suppliers can be a challenging task. However, doing so can be very beneficial for your organisation.
Another important aspect of the supply chain management system is to improve the quality of the product. Quality assurance is complying with the various customer related quality parameters, which can range from performance to other features. In some businesses, it is important to be actively involved in the process to be able to quickly handle modifications in real time. Supply chain management system makes it easy for the business to keep items moving through the supply chain. Moreover, quality management in supply chain helps in gaining a competitive advantage over other businesses and also helps in reducing the operating expenses.
“The global supply chain market is expected to experience a CAGR of 11.2% from 2020 to 2027.”
The supply chain management system streamlines the distribution process which in turn benefits the business organisation. Supply chain management takes care of all your delivery processes and makes sure that all the suppliers, manufacturers, distributors, and retailers are being kept in the loop. It also enables you to optimise various logistics activities with any buyers that you are doing business with. Proper coordination between multiple transportation departments and warehouses is made to ensure faster movement of goods. It also allows organisations to reduce their delivery expenses and also deliver things more efficiently. As a result, it is beneficial for businesses to invest in technology as it allows them to efficiently manage their inventory, automate the delivery process, provide real time tracking of goods, and also conduct other distribution activities efficiently.
Supply chain management has been proven to improve the coordination between a business’s various stakeholders by providing a communication channel. The employees, customers as well as suppliers can communicate with the business much more efficiently with this help of this channel. Also, the customers can obtain necessary information via self portals, which are made available as a part of the customer support system. The better the communication that a business has with its customers and suppliers, the more efficient that business turns out to be.
In any business the customer satisfaction entirely depends on two factors: pricing and delivery. Supply chain management focuses on these two factors and makes it possible for your business to outgrow its competition in terms of pricing and profitability. As far as delivery is concerned, having high performance operations and providing the customers with what they want and when they want it at the lowest possible price can derive the maximum amount of customer satisfaction.
A mixture of art and science which primarily focuses on how a business obtains raw material to make a product to the delivery of that product, is known as supply chain management. One such well known name in the supply chain industry in India is AWL that uses art and science and delivers the best supply chain solutions for your business. A supply chain management system is required to keep up with the market shift therefore; it is called the backbone of any business. However, the basic purpose of supply chain management is to make the business profitable by increasing the efficiency and quality, lowering the costs, optimising delivery and distribution techniques and also by providing the maximum customer satisfaction possible.
Also Read: How does an efficient warehouse help smoothen supply chains?
