Supply chain management. You know what it is and chances are you have implemented a strategy for it in your own business. You know its value (boosting performance and competitiveness), yet you feel something is slipping away from you.
What does supply chain management do?
Avetta will answer each of these questions and invite you to reflect on your own experiences, opinions and ideas about supply chain management, and its potential impact, now and in the future, on your business.
What does supply chain management do?
The ultimate goal of supply chain management is to transform a complex set of upstream and downstream activities into strategic capabilities, harmonized processes and stronger relationships.
Achieving this high level of management presents many challenges (though your company has probably encountered most of them already), yet the resulting beneficial impact is significant. As you build an effective procurement system, you must also build relationships with your network of partners and customers, and position your business on the path to financial prosperity.
What is the main business reason to implement a supply chain management strategy?
From a purely commercial point of view, the main reason is financial. Any real improvement results in cost savings or financial gain, either contributing to an increase in net benefits.
While there are many ways to increase profits (increase sales, introduce new products, etc.), improving supply chain performance remains the most profitable. What do you mean ?
The answer lies in reducing the cost of goods sold associated with manufacturing a product. Factoring in factors like logistics, raw materials, manufacturing, storage, transportation, duties, and labor, these expenses can easily add up to a dizzying proportion on an income statement. 80% of sales . Reducing this percentage even a little could have a major impact on total profits.
What are the objectives of supply chain management?
There are five strategic supply chain management goals that every leading company should strive to achieve.
Achieve collaborative efficiency that makes automatic logistics coordination possible for both suppliers and customers.
Provide high quality and high value products to end customers by recognizing the benefits of feedback and resolving all issues with win-win solutions.
Promote long-term stability and sustainability by optimally planning and executing every action, from the supply cycle to the order cycle, in order to successfully meet all customer needs.
Anticipate and exploit potential opportunities and threats so that adaptation is not only possible, but also rapid, transparent, and even productive and beneficial.
Drive financial success (and limit financial risk ) by reducing inventory, labor, and logistics costs while improving sales, gaining market access, and differentiating the brand from competitors.
If your business can achieve these supply chain management goals, it will experience tremendous success. A well-executed supply chain can have a tremendous impact, as shown by a simple calculation of the cost of goods sold (COGS), as well as a chain of causality.
When it comes to cost of goods sold, even a slight reduction can have a major impact, and not just because of direct costs. Optimized inventory that’s close to perfection and flexible forecasting that can handle any situation can together push COGS back even further.
Achieving supply chain management goals also helps improve relationship development and has a positive impact on causal sequences, which ultimately reduce the following (each of which has a variety of causal sequences assigned to it clean
