Strategic importance of a Supply Chain Management System

Strategic importance of a Supply Chain Management System

Supply Chain Management System is an integrated system that lets an organization carry out active management of their supplies, stocks, inventories, production, and logistics. A proper management of the supply chain activities enables the organization to maximize their customer value and achieve a competitive advantage sustainably.

Every product that reaches the end user or the consumer is a representation of a cumulative endeavor of multiple firms. These firms are collectively referred to as supply chain. The organizations that make up this supply chain need to be linked together by product or information flows in order to avoid ineffective or disjointed.

1. It connects businesses

The world today can be viewed as one huge supply chain, with so many businesses interconnected to each other; a supply chain management system will take these connections to another level and open more opportunities for collaboration. Anything that is able to cause fluctuations in business like excessive demand, less supply, etc. can be tackled with the help of this system and an advanced supply chain can be maintained. The system can also give rise to more growth and partnerships opportunities for the organization.

2. Integrated logistics

Organizations that run their businesses in different locations and require cooperation and communication to have a smooth functioning with their logistics, will benefit in a great way with a system that will manage their supply chain. Having such a system also induces a proper and hassle free coordination with the logistics and will result in an error free continuation of the business. When the logistics and the supply are coordinated, the risks of any problems arising are far less than if there is no coordination at all. For organizations that run on a larger scale, synchronization is essential. It will also work for product that might not be within the inventory but are still in high demand. As McKinsey states it, when demand for a new product has risen, businesses can add low cost warehouse capacity and keep the sales going.

3. The better the supply chain management, the better the progress

An advanced supply chain has a huge impact on the organization’s growth. It can make or break your customer reputation, brand recognition, and customer satisfaction directly. When the correct goods are delivered to the right client and are on time, customers can rest assured that their goods will reach to them on time and in a proper, undamaged state. This will make your business more like a go-to company for the things that you sell or services that you offer.

Clearly, supply chain management plays a major role in organizational activities, and is also an essential aspect of managing operations efficiently. It acts just like the backbone of the company that takes care of the management of the important issues that have a direct influence on the image and growth of the organization. Having a supply chain management system will represent the organization’s conscious effort to develop and run their organizational activities and supply chain management in the most effective way possible.