Over 70% of organizations lack an effective supply chain management program. Did you know a single disruption in an organization’s supply chain is a major trigger for huge financial losses? These disruptions result in a massive interruption to an organization’s value chain system. As such, organizations must develop proactive strategies to minimize the risks.
Supply chain management could be the solution if your organization has run short of its intended objectives. But to understand the meaning of this phenomenon, you first must understand the supply chain process.
What is Supply Chain Management, and why is it important?
According to Janvier-James, an associate professor at Donghua University’s School of Business, a supply chain is a highly organized process that facilitates the transformation of raw materials into finished products. Afterward, the finished products is delivered to the end consumer.
Based on this definition, supply chain management can be understood as the process involved in handling production flow. Businesses with effective supply chain management usually establish linkages in the chain, also known as suppliers. The links are vital for moving products from the raw materials supplier to the end-user.
The Types of Logistics Involved in Supply Chain Management
- Order Processing – This is the procedure applied from the moment customers place orders to the time the orders get delivered to them. Thus, it forms a vital part of retail order fulfillment. Some of the main steps involved are the shipment, picking, tracking, and sorting.
- Freight Forwarding – This process involves acting as an intermediary between the customers in their delivery destinations and the shipping organization. Freight forwarding mainly applies during international trading instances. The intermediary might not undertake shipment but rather facilitate it through various transportation means.
- Packaging – The operations under this particular step are vital in ensuring the products’ integrity is preserved as they are being shipped from the organization to the intended final destination, which is the consumer in most instances. Besides, packaging can be a fundamental marketing tool as it conveys a message to the user via visual attractiveness.
- Customer Service – These are the actions initiated by a logistical company to satisfy all the customer’s needs. Thus. It essentially adds value to the core service. When you get good customer service, some added value can be efficiency, customized delivery options, flexibility, and reliability.
Importance of Supply Chain Management in Logistics
The following are critical facts that describe the importance of supply chain management in Logistics:
Enhances Customer Satisfaction Levels
One of the primary focuses is the timely and efficient delivery of goods and services to the end-consumer. Providing an effective delivery and high-quality product across all the steps can significantly contribute to customer satisfaction.
Increases the Cost-Effectiveness of Organizational Operations
An ineffective supply chain lacks vital activities such as quality review and performance management. These activities are essential in minimizing the risks of an organization during the procurement and logistics processes. Efficient risk management has a direct and positive relationship with optimal operation costs.
Maximizes the Preparedness Level of a Business Establishment
Proactive organizational strategies can be invaluable regarding the risk management of a business establishment. Supply chain management ensures that a company is prepared in case of the unexpected since it increases the probability of supply chains being streamlined and highly visible. The streamlining capability of this concept contributes to the timely analysis of problems to develop efficient solutions.
Ensures Efficient Transfer of Information in the Supply Chain
Supply chain management enhances how the components and linkages in the supply chain relate for optimal results. In most cases, communication occurs in the opposite direction of the supply chain process. Information is transferred back to the suppliers from the end-users. The process involved in this transfer can be complex and intensive. Hence, it’s not unusual for advanced technology to be applied by companies to ensure the success of the procedure.
Supply chain management can enhance the capability of enterprises to scale their profitability levels. Therefore, be vital in improving and sustaining the financial position of an organization.
Amekar Logistics goes the extra mile to ensure your supply chain operates smoothly. Contact us if you are ready to expand your business and require assistance with your import/export needs.