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Benefits of Supply Chain Management

Supply Chain Management
Reading Time: 6 minutes

Summary: Supply Chain management (SCM) is a significant part of business operations. The supply chain chiefly involves sourcing raw materials to delivering the finished product to the customer. A study says that 45.1% invested in automation for the supply chain management. It involves a vast network of business processes that must be monitored continuously to avoid blockages. Supply chain management is essential to perform all business functions at less cost.

What is Supply Chain Management ?

Supply chain management is the intricate process of monitoring all the functions, from sourcing raw materials to delivering the finished product to the customer. Production, sourcing, distribution and inventory management are the main functions of supply chain management. Maintaining the flow of the entire process of this segment is significant.

Supply chain management is evolving fast, so this crucial operation must be agile and effective to contribute to revenue and company growth. A company can have a competitive advantage if it has an excellent supply chain management plan.

Communication is pivotal in the supply chain process. Better communication contributes to more transparency of data. Manually communicating and recording each data is complex; sometimes, there is a possibility of recording inaccurate details. Relying on an automated ERP system reduces the risk of registering false information.

There are two focal points that the supply chain management has to worry about – quality and delivery of the product on time. This can be achieved with an efficient communication channel and data accuracy.

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Supply Chain Management (SCM) Process

An adequate supply chain management plan is essential for the manufacturing industry to maintain the balance of business functions. One single block can affect the entire business process if not controlled. The vital role of supply chain management is to ensure that the whole supply chain process is efficient and cost-effective. There are five stages of supply chain management. Let us look into them in detail.

Plan

Supply chain management commences with an effective plan to fulfil the customer’s demands. You have to address how the plan will impact the customers. Analyze how the plan will influence your profit margins. Focus on strategies that work best for your company’s growth.

Sourcing raw materials

Next comes the necessity to identify vendors supplying quality raw materials. Later you should focus on shipping, delivery and payment of the raw materials. Then you need to check if the vendor provides the resources on time. Find out if the vendor is supplying the materials even during unforeseen events.

Maintain a robust relationship with the suitable vendor who qualifies all your criteria for procuring raw materials.

Make (manufacture)

After obtaining raw materials, the next step is manufacturing the raw materials. The result is a finished product that the consumer can use. In this stage, the task is to manufacture, test, pack and prepare the product for delivery.

Delivery

This stage is a logistics phase where the products are delivered to the customer using some transport mode. The product is taken from the warehouse, shipped via delivery truck, and received by the customer on the house’s doorstep.

Return

If the product is found unsuitable for the customer, the product is returned to the supplier immediately. There are many reasons why a customer returns the product. Predominantly, if the product is defective, the customer will place a return, or if the company finds their batch of products unsuitable for the customer to use, the product is recalled immediately. In either case, the supplier should arrange for logistics to pick up the product and a refund has to be initiated to the customer directly.

<<<Also read: What is Supply Chain Management (SCM) in ERP?>>>

Benefits of Supply Chain Management

Having structured and effective supply chain management is a boon for the company. Before tailoring the plan for the supply chain, consider analyzing the benefits your company will achieve by implementing these strategies.

Cost-Effective

First, comprehend the key areas where the costs can be reduced.

  • Purchase cost-effective raw materials, and at the same time, their quality shouldn’t be compromised.
  • Eliminate defective products from the warehouse by making space for new finished goods.
  • If the product is manufactured with the utmost care, following all the safety and regulatory measures, there won’t be any room for defective products.

Improved Efficiency

ERP system has improved the efficiency of the supply chain process. A consistent data flow is a key to skillfully managing the supply chain. Take a look at the benefits of automation on the supply chain.

  • End-to-end data transparency promotes flexibility and resistance of the supply chain.
  • Reduce logistic errors and late shipments.
  • Aids to improve customer service.
  • Helps in making quick decisions to improve supply chain flow.
  • Real-time data visibility avoids confusion.
  • Assists in tracking logistics location.
  • Save time automating processes such as order processing, invoicing and shipment tracking.

Improved quality control

Quality control is essential for a company to stay competitive and meet customer expectations.

  • Effective communication is an essential factor in supply chain management.
  • Quality is a prime parameter to consider from the procurement of raw materials till the product is delivered to the customer.
  • It also aids in controlling wastage and maintaining KPIs for the best business outcomes.

Customer retention and experience

Companies investing in an effective supply chain management plan can have immense advantages and impact the customer.

  • Customer responses can affect the reputation of the brand.
  • Attract new customers and keep the existing customers happy with your services.
  • If your company prioritizes customers, you should ensure a seamless flow of supply chain functions.

Higher revenue and profitability

  • A good supply chain management plan promotes the agility and accuracy of data.
  • Access to real-time data enables us to predict risks and take necessary measures to avoid them.
  • The above factors result in achieving high-profit margins.

Eliminate delays

  • Firstly, you can avoid delays with a well-tailored plan and alternatives.
  • Communication within the departments is vital to prevent late shipments, delays in logistics and hold up on product lines.

Reduces Legal Liabilities

A company’s supply chain can impact the brand’s reputation. Negative publicity is bad for your company’s survival.

  • Legal liabilities can occur if your company is violating CSR standards.
  • Accurate data is essential to mitigate risks. If your company have access to real-time data, it will be easier to predict any risks in advance and eliminate them.

Freight optimization

Shipping is an integral part of supply chain management.

  • First, organize the products such as a small products should be sent in smaller vehicles and bulk orders and the large product must be sent in bigger freights. This strategy will help the company to keep the costs at a minimum while saving time.
  • Faster delivery will keep the customers happy.
  • In case of product returns, schedule the return immediately before the customer raise any concerns.

Supply chain management is fundamental for a company. A well-laid plan must be executed to achieve the highest customer satisfaction. The benefits of supply chain management are vast. So an effective strategy in place will take the company to greater heights. Consider software integration; it’s a solution to work efficiently and faster. Every company wishes to attain a seamless flow of supply chain functions.

                                                     <<<Also read: Top 6 Ways to Tackle Supply Chain Complexities>>>

Sage X3

Sage X3 is an ERP system that integrates all the primary business functions to balance and work effectively. Sage X3 ERP software values and understands a company’s concerns on supply chain management. Based on each company’s requirements, this ERP system is customized. This ERP system best manages the entire supply chain process without any blocks.

  • Product data and multiple units of measure.
  • Location management.
  • Inventory balances.
  • Quality control and sampling.
  • Replenishment, inter-site transfers.
  • Order release.
  • Stock movements.
  • Import tracking.

More add-on features for Sage X3 are essential for the company to manage the supply chain process. End-to-end transparency, data accuracy, agility, and secure and real-time data access are the benefits of Sage X3.

Supply Chain erp infographic

Sage Software Solutions is a leading IT company with an array of advanced ERP Software solutions. Our proprietary products — Sage X3 and Sage 300 will help you cut your operational expenses, improve business productivity, increase operational efficiency, forge robust customer relationships, and strengthen association with vendors, suppliers, and distributors. So, if you are looking to reinforce your business fundamentals and emerge as an industry leader, then please schedule a call with one of our sales representatives.

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