Wednesday, 3 November 2021

What is the importance of supply chain management?

 Well, we all know that supply chain management plays a major role for the company to help it achieve success as well as for the customer satisfaction. Thus there is need that every company in order to maintain their success, should balance their supply chain management. 

Before understanding the importance of supply chain management, one should understand what is supply chain? Supply chain is the process for the creation of finished material using the raw material. The process of supply chain begins with cultivation of the raw material and ends up with the creation of the finished product.    

The process involves first the manufacturing of the product, and then the final product goes to final customer via wholesaler, retailer, and other middleman.

Now comes to the main topic. Here in this guide, we will learn that why supply chain management is important for the company?

Importance of supply chain management

Supply chain is the integral part of the operation of the business. Following are some of the advantages of supply chain management for the company:

Reduction of the operation cost

  • More economical raw material

First, the most economical method to get raw material in affordable price by purchasing it in bulk. Thus it will impact positively on the pricing of final product. In the case when the raw material can be stored for long time, buying it in bulk during the off season will significantly help in reducing the production cost. 

  • Effective management of incentives

Reduction of wastages and proper management of the incentives will help in reducing the overall cost of the production process. Make sure, the ware house should be suitable to keep the incentives safe from rodents as well as other natural calamities.

  • Ensure no shortages

For a company, there is need that the production process should stay continues for the adequate cash flow. Thus there is need that the company should make sure that the reliable suppliers keep supplying the raw material continuously in order to prevent shutdown of the production processes.   

Importance of supply chain management in businesses

First, it is not possible to run any business with a proper supply chain. It is supply chain that makes it possible to deliver the raw material to the manufacturing company, and to transport the final product to the main customer.

 As mentioned above that supply chain management is helpful in reduction of operation cost, thus it will increase the overall profit of the company. Also, with the lower operation cost, the company can lower its retail price as well and thus will increase the demand and sale. 

Enhanced customer satisfaction

Proper supply chain management is required to keep balance between the demand and supply in the market without hampering the quality of the product. When the high quality product stays available as per the demand of the market, it will over enhance the satisfaction of the customer.

Impact of supply chain management on society

  • Importance of Supply chain management for human life sustainability

The proper supply chain management of the daily essential is required for the survival of the human life. Any gap in this supply chain can bring hazard on the survival of the humans.

  • Importance of Supply chain management in human health care

The continues supply chain of the healthcare products and medicines are required for the maintenance the persistent healthcare facility. A little gap in the supply chain of the emergency medical facilities can convert life into death.

  • Importance of Supply chain management in the case of climatic extremes

For continues supply chain to deliver electrical energy to business as well as for the domestic supply. We cannot imagine our life without electricity. A proper supply chain management is required to fulfil all the demands for the supply of electricity.    

  • Better life quality

Better living of standard

With the help of developed supply chain, we can keep balance between business and consumer at lower cost. This will help the consumer to purchase more products at economical cost which will help them in increasing the quality of living.

Job creation

For the management of supply chain, there will be requirement of numerous skilled professional for the operations of different task including the management of transportation, management of stocks, packaging and other statistics details and many more. This will help in creation of multiple employment at different scales and thus will help the youth to overcome the employment issues.    

Pollution reduction

There are involvement of several practises in supply chain management process like packaging and product transportation that results in production of by products and many more pollutants. From these activities, there are creation of more pollutants in our environment like CO2, paper waste, and many more. So there is requirement that the Supply chain management professional should shift their focus to recycle these wastages and targets more on sustainable methods.

Reduction in energy consumption

There is involvement of both the humans as well as products transportation in the process of supply chain. This results in the depletion of scarce resources. For example, transportation costs much in the supply chain along with the creation of pollution as well. So the supply chain management designers require to consider designing of more energy efficient supply chain that utilizes less resources.

The bottom line

So these are some of the major advantages of the supply chain management. This proved that having a supply chain management is essential for all businesses.



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