Supply chain management is the process of keeping track of how goods and services get from where they start to where they end up. These steps make sure that the orders of customers arrive on time and in the right amount. This article will cover the goals of supply chain management in-depth and provide some examples for your convenience.
Keeping track of the flow of goods from suppliers to customers requires careful planning, organisation, leadership, and management. It is important for every business because it affects the nature of the brand and how happy customers are. The main goals of supply chain management are to increase output, lower costs, make more money, and make sure the business stays in business. Supply chain management is hard, and companies may have trouble putting together a plan that works well.
Goals of Supply Chain Management
Getting goods from point A to point B is an important job for any business that sells things. Strong supply chain management is important for any business, whether it’s just one person running Amazon or a multi-national organisation selling millions of products each year. We’ll look at the goals of supply chain management and talk about the related topics in this area. Read this informative analysis for a deeper dive into the data behind types of supply chain management, issue.
Achieve Efficient Fulfillment
The main goal of supply chain management is to make it easy for stock to be found at points of sale so that orders can be filled. The saying “you can’t sell from an empty waggon” is a great way to explain this important part of managing the fresh produce supply chain.
Businesses must get the most out of their cross-chain resources if they want to meet customer needs quickly. Participants in the supply chain should work together to get the most out of their resources, standardize their methods, avoid wasting time, and cut down on the amount of stock they keep. These changes will help the company save money and make its operations more efficient all along the supply chain.
Facilitate Financial Success
Supply chain management has a big effect on the bottom line of the business. The main goal of traditional methods is to lower costs. This includes things like lowering the number of items in stock, automating order fulfillment to save money on labor, combining orders to save money on shipping, and so on.
On the other hand, successful businesses use the supply chain to make themselves more competitive, make more money, and grow into new markets. The goal is to make more money and give more money back to shareholders (Anderson, Copacino, Lee, & Starr, 2003).
This means that supply chain managers must be able to handle a higher level of cross-functional and cross-company complexity in their jobs. They need to know how the company works and how to deal with the challenges of managing the company’s relationships with its suppliers and customers (Dittmann, 2012).
Make Networks more Stable
A company’s supply chain could be messed up in a big way without warning and for no clear reason. Natural disasters, extreme weather, worker strikes, supplier failures, and other things can all stop the distribution of goods and put money, reputation, and relationships at risk for businesses. One study has linked supply chain problems to an unexpected drop in shareholder value of more than 10% (Hendricks & Singhal, 2003).
Due to the high cost of downtime, companies have to deal with these risks in the supply chain. Standard pre-disruption steps include looking for threats, figuring out how bad they are, and making plans to deal with them. Sheffi (2005) says that businesses should work together on safety and security issues, add redundancies to their supply chains, and invest in their employees by cross-training them to make them less vulnerable to risks of disruption.
Recognize True Competitors
The next step for people in charge of a supply chain is to find competitors who can really compete. In the digital age we live in now, it’s possible that competitors aren’t who they seem to be. Long-standing stores often overlook online marketplaces like Amazon as a significant business threat. Businesses should stop thinking about the product or service they sell and start thinking about the problem they solve.
This will help them figure out who their competitors are. This way of thinking was named “Jobs to Be Done” by Dr. Clayton Christensen of Harvard Business School. Evaluate consumer tasks to determine if other products or services can complete them faster or at a lower cost. Supply chain management aims to deliver goods and services efficiently to customers. Competitors are real, so companies need to run their supply chains efficiently to stay in business.
Fulfillment Efficiency
The main goal of supply chain management is to keep stock in places where customers can easily get to it. Organizations optimize supply and demand by efficiently utilizing cross-chain resources. The supply chain must reduce waste, utilize resources, avoid duplication, and minimize inventory. Implementing these strategies can optimize the supply chain, reduce waste, and save money.
During economic uncertainty, cost-cutting through streamlined supply chain is a critical goal for companies. Any part of the supply chain can be a place to make productivity gains. Still, many businesses think that they can save money on transportation and managing their inventory.
Increase the Responsiveness
Changeability is also important for supply chain management to work well. In today’s fast-changing business world, there are many things that affect how well businesses work. Globalization, economic uncertainty, and customers’ rising expectations are just some of the problems businesses face today. Supply chain management might help them adjust to these and other situations.
According to Coyle et al. (2013), international trade growth creates opportunities for new market entrants. Panasonic, Samsung, and Sharp aren’t the only TV makers that compete with Vizio and Hisense for shelf space and sales. International business costs are also going up. Increased labor costs in developing countries negate the promise of global sourcing lowering product prices.
A deep understanding of SCM and flexible network infrastructure is required to address these issues. Also, globalization might offer opportunities for growth. Businesses can easily meet the needs of new markets if their supply chains are flexible.
Bring Value to Customers
Managers of the supply chain should put creating value for their customers ahead of making sure orders are filled quickly and at low prices. Customers are what keep a business going, so there needs to be a way to get new ones all the time. The main goal of supply chain management should be to keep customers happy, if not thrilled, all the time.
To increase customer value, businesses must first develop a market-driven customer service strategy that prioritizes customer needs. Sweeney (2011) uses these standards to make plans, designs, and skills for the supply chain. As a result, the quality of service will get better, there will be less variation, and fewer special cases will need to be handled.
Monitor Financial Success
The bottom line is a clear and important goal of supply chain management. Traditional ways to cut costs include keeping as little stock as possible, automating order fulfillment to save on labor costs, and grouping orders together to save on shipping costs. On the other hand, modern market leaders use the supply chain to make their products stand out, sell more, and get deeper into the market.
The company’s goal is to make more money for its shareholders while keeping a strategic edge. When C-level executives work on both controlling costs and making more money, they learn more about supply chain management. The supply chain manager can lead the organization to shift from a set of day-to-day tasks to a strategic process when they give more strategic weight to financial goals.
Make the Supply Chain Strong
Supply chain problems, both big and small, happen all the time to businesses. Natural disasters, labor strikes, and supplier equipment failures are examples of rare events. Businesses lose money and a good name because of these delays in shipping goods. Due to how much it costs to fix problems in the supply chain, businesses must manage supply chain risks well.
Disruption management skills should be developed alongside risk mitigation skills. Businesses must be able to spot problems and fix them, as well as change their systems to make them less vulnerable in the future. Given the risks, it is very important to set up supply chains that can get back to normal quickly after big problems. The job of supply chain managers is to plan for a wide range of possible, but unlikely, threats to the supply chain.
Adding Value for the Customer
Customers are what keep a business going, so it is important to have a reliable supply chain. Because of this, supply chain management must always go above and beyond to meet customer needs. Businesses provide value by offering market-driven good service based on customer needs. Improved quality of service, reduced variation, and fewer violations are results of better supply chain management.
There are a number of good ways to find out what customers value most. “Quality functional design” is a method that is often used (QFD). To start a QFD, you have to talk to customers to find out which features are most important to them. For an A-B test to be done, the customer must be given both Option A and Option B. E-commerce sites prefer this strategy to choose optimal shipping methods.
Get more Flexible
Supply chain management skills should be invested in because they can adapt to change. The economy is unstable right now, and many things affect a business’s ability to stay open and make money. Supply chain management can help businesses deal with problems like globalization, unstable economies, and rising customer expectations. When the economy goes down, both customer demand and business output are affected in big ways.
Supply chain planning and flexibility are crucial for business success. Flexible operating models and dynamic supply chain help businesses during recessions. Standardized procedures and systems also make it easy to increase or decrease operations in response to sudden changes in demand. Stay flexible due to short product life cycles, new tech, and increased government oversight. It will be much easier for a supply chain that can change quickly and adapt to these changes.
Frequently Asked Questions
What are the Main Goals of the Supply Chain Management?
The main purpose of supply chain management is to make products and get them to customers. But just having the goods isn’t enough; the quality of the goods is also important. The goods you give them should be as good as they can be.
What are the Six Goals of Supply Chain Management?
Supply chain management’s top priorities should be meeting customer needs well, promoting great customer value, making the organisation more responsive, making the network more resilient, and making sure the business does well financially.
How can SCM Help in Reaching Long-term Goals?
These long-term plans include making things more effective, better, and giving them more infrastructure. By putting your attention on these areas, you can gain a competitive edge in your industry and cut costs at the same time.
Conclusion
All suppliers, manufacturers, distributors, and customers must work together and be coordinated for supply chain management to work well. The use of technology and data analytics to improve supply chain visibility and decision-making is another part of this process. In this article, we will cover the goals of supply chain management along with equivalent matters around the topic.
