Essay Sample on the Role of Supply Chain Management in Business

Published: 2022-04-01 11:46:10
Essay Sample on the Role of Supply Chain Management in Business
Type of paper:  Essay
Categories: Business Supply chain management
Pages: 5
Wordcount: 1115 words
10 min read
143 views

Funding issues are cited as the most common reason for business failure. However, the causes of financial troubles are diverse, and they can stem from inefficient operations, poor customer experience, and inflated expenses. In turn, these problems can result from unaddressed supply chain issues, among other things. Therefore, holistic supply chain management is an integral factor of contemporary businesses’ viability, as it affects expenses, customer satisfaction and retention rates, as well as overall operational efficiency.

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Holistic Approach to Modern Supply Chain Management

Traditionally, businesses rely on compartmentalized management throughout individual divisions or departments, such as procurement, manufacturing, transportation, marketing, and others. Supply chain issues run through these departments without affecting decision-making but relying on disparate input. However inefficient, this approach lasted until the early 2000s, when the information technology industry developed disruptive solutions that can be adopted in supply chain management.

The Internet of Things (IoT), Big Data, and Artificial Intelligence (AI) are being implemented across international enterprises and small businesses to collect relevant data in real-time, accelerate decision-making, and develop precise forecasts based on historical data. As a result, supply chain management became an integral part of manufacturing, procuring, and marketing processes, tied together by technology. Individual aspects of the supply chain can no longer be considered independent and must be analyzed as parts of a bigger whole to ensure maximum efficiency and minimize losses.

Elements of Modern Supply Chain Management

Technology, evolution, and sustainability are three core elements of modern supply chain management. Disruptive hardware and software solutions, such as IP cameras and RFID sensors, are used for tracking inventory and sending real-time information about stock values. At the same time, neural networks analyze Big Data to estimate procurement and warehousing requirements. Moreover, the fast-paced changes present across most industries require the ongoing evolution of the supply chain system to address arising issues and cut down the expenses on non-value-adding processes. At the same time, supply chains must remain resilient and flexible to withstand abrupt changes in demand, as well as global and local economic, political, and healthcare crises.

Business Value of Supply Chain Management

Customer-centric, personalized items and services are taking over major industries in place of faceless, mass-produced products. Therefore, customer experience and satisfaction become crucial business success factors, and careful supply chain management can boost lifelong customer value and retention rates through ensuring sufficient supply of relevant items, accelerating delivery speed, ensuring careful shipment without errors, damages, or delays. When these factors are accounted for, the customers remain happy, while every minor disruption of the supply chain may result in negative reviews that build up into reputational losses recovering from which requires time and resources.

While improved customer satisfaction has the potential to increase revenue, supply chain management can also reduce costs. Through thorough reviews of every supply chain link, businesses can reduce the time it takes for the product to move from the manufacturer to the customer. At the same time, structural improvements to the supply chain may have an even bigger effect. For example, businesses can reduce or eliminate warehousing and storage costs by altering the timing of different product shipment phases.

Precise inventory management is another avenue for cost reduction through supply chain management. Real-time information on stock enables businesses to make critical procurement and shipment decisions fast. For example, timely restocking of vending machines ensures customer satisfaction and higher revenue at the same time. Additionally, historical data is used to estimate seasonal demand and alter stock to meet the peaks and lows of customer demand. Some items may be eliminated from the offers, while popular products may receive further improvement or development.

Modern supply chain management can also account for transparency and accountability when it comes to manufacturing, procuring, and shipment. As ecological and ethical issues get entangled with businesses across multiple industries, from Entertainment to Retail, supply chain managers keep a close eye on potential reputational risks that threaten to reduce the customer base and promote regular clients to turn to the competition.

However, customers are not the only ones to win from an enhanced supply chain management system. Relationships with suppliers and distributors can gain a lot as well. Having a precise estimate of future demand and placing orders in advance allows business owners to remain on suppliers’ good sides. Providing distributors with high-demand products at the right time is a win for every stakeholder. The clients are happy to get their hands on the desired items, distributors establish stronger relationships with the customers, and businesses boost their revenue due to efficient supply chain management.

Finally, a holistic approach to supply chain management can become a competitive advantage for startups and existing businesses. A thorough audit of existing systems and processes can help identify the bottlenecks and weaknesses in need of elimination. At the same time, a consistent effort to improve supply chain management can turn it into a way to outcompete business rivals. For example, businesses can focus on one-day delivery, like Amazon, offer a broad selection of products, or focus on sourcing natural, organic ingredients. Any changes made to the supply chain system must align with the existing manufacturing, procurement, and marketing strategies, as an integral part of the daily operations.

Conclusion

Most businesses fail when they run out of money, whether because they do not find customers for their offers or because their expenses exceed profits. However, many factors affect the bottom line of a business operation, and supply chain management is among the critical factors that can mean the difference between success and failure. Traditionally, supply chain management was considered a separate process unrelated to marketing, manufacturing, or warehousing. However, the advances in disruptive technologies, such as AI, Big Data, and IoT, enable a continuous evolution of a resilient and flexible supply chain system that can become a competitive advantage.

The business value of implementing a modern supply chain management system is immeasurable, as its effects are numerous and multifaceted. Ensuring the right products are in the right place at the right time promotes customer satisfaction and builds loyalty, while precise estimates of future demand trends based on historical data help establish better relationships with distributors and suppliers. Brand recognition and loyalty are further enhanced by establishing a transparent and accountable supply chain that guarantees the use of ethical, eco-friendly, and fair trade raw materials and workforce. At the same time, supply chain management helps to handle inventory and keep it stocked with high-demand items while reducing expenses on activities and offers that do not drive value. Considering all the business benefits of a modern, holistic supply chain, it plays a critical role in contemporary businesses across all industries and niches and provides opportunities for increased revenue and reduced expenses.

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