Did you know? How you manage your supply chain can make or break your business!
Most recently, VKT has embarked on a Digital Transformation project for a local SME in the healthcare industry. As the business aims to move its operations towards that of an omnichannel business model, this project involves the transformation of their end-to-end supply chain management. In our initial diagnosis, we found that the business’s back-end operational process was entirely manual, and this ranged from planning, sourcing, to even the flow of goods. We believe that our client partner will be able to improve productivity, accuracy, and efficiency through automation of their supply chain, which will ultimately further lead to cost savings and revenue growth.
📌 What Is Supply Chain?
Supply chain management can be defined as the control of the flow of goods and services from the point of manufacture to the point of consumption. It also involves the transportation and the storage of raw materials used in work-in-progress, inventory, and completed goods. Supply chain management is critical in this era of globalisation, as organisations strive to provide customers with the greatest quality products and meet all of their demands. To get a better understanding of what supply chain management entails, let’s first define what exactly a supply chain is.
A supply chain is a network that connects a business with its suppliers in order to manufacture and deliver a specific product to the end user. Different activities, people, entities, information, and resources are all part of this network. Companies create supply chains in order to decrease costs and remain competitive in the marketplace. Large firms and projects may have multiple supply chains, and these are referred to as supply networks.
📌 Components of the Supply Chain Management Process
Effective supply chain management requires an understanding of the supply chain process. The supply chain process is divided into five parts as follows:
1️⃣ Plan
Companies must plan to match demand with supply in order to regulate inventories and the production process. This keeps businesses from overpaying on storage space or running out of raw supplies, both of which delay product delivery.
Another important concern procurement teams must address is whether the business intends to manufacture in-house or purchase ready-made goods. If the business plans to manufacture, the next question is where raw materials will be supplied. Likewise, if the business buys ready-made products and sells them to customers directly, an important question to ask is where these items are going to come from.
2️⃣ Sourcing
The sourcing stage entails locating suppliers that can provide the goods and services you need. This is one of the most important steps in the supply chain, as the highest cost reductions may be realised at this point. This stage will necessitate not only the identification of vendors, but also the evaluation of how suitable they will be for your business.
3️⃣ Manufacturing
In this stage, raw materials are turned into goods that satisfy your customers’ needs. Obtaining customer feedback is critical to providing value to customers. Here, businesses organise the steps necessary to accept raw materials, create the product, test it for quality, and package it for shipping.
4️⃣ Delivery and Logistics
The next critical phase in the supply chain management process is getting your final product to the consumer. All of the preceding processes are for nought if you can't get what you manufacture to your customers. Here, customer orders are coordinated, deliveries are scheduled, loads are dispatched, customers are invoiced, and payments are received.
5️⃣ Returning
Reverse logistics, often known as return logistics, is an element of the post-delivery customer service process. If you don't have a clear return channel, you risk ruining your brand. Through effective reverse logistics systems, low-quality, faulty, or expired items can subsequently be returned to the company's suppliers.
📌 Benefits of Supply Chain Management
As said by Richard Wilding, one of the world's leading experts in logistics and supply chain management, “Competition is becoming less between individual companies, and more between the supply chains they are part of.” Let's take a look at some benefits of effective supply chain management:
1️⃣ Maintains Competitive Advantage
Markets evolve, and as the marketplace becomes more global, the requirement for greater efficiency becomes increasingly important. With supply chain management, companies will have a solid grip over their internal inventory, production, distribution, and sales. This can ultimately lead to the company having a vital competitive advantage over its competitors.
2️⃣ Increases Supply Chain Productivity
Supply chain ecosystems have emerged as a result of these developments in supply chain management. Joint ventures, strategic alliances, and other collaborations, as well as technical improvements have all led to increased supply chain collaboration. Companies must adjust as supply networks become more holistic and cooperative.
3️⃣ Makes Employees More Proactive
The more complex a company's supply chain is, the more adaptable the company must be. This encourages creative thinking, which in turn leads to greater productivity and creativity. As such, supply chain management helps firms foster innovation and productivity.
4️⃣ Reduction of Operating Costs
Supply chain management is critical in lowering operating expenses. When implemented correctly, it may reduce the costs of purchasing and production. An efficient supply chain can reduce the requirement for inventory management, lowering overhead expenses related with storage and security. This strengthens a company's financial position by raising earnings leverage, lowering fixed assets, and boosting cash flow.
However, it is important to note that a very lean inventory may strain distribution networks and diminish supply chain resilience. As a result, determining your ideal inventory level is critical.
What are your thoughts? Let us know in the comments what you think about supply chain management!
📌 Ready to Embark on Supply Chain Management?
Still unsure how to start on supply chain management within your business?
With our experienced EDG Certified Consultant, VK Transformation is enthusiastic about helping B2B and B2C businesses accelerate their business model, brand, and marketing transformation. As you get started on supply chain management within your business, our strategic consulting wing can help you with diagnosis, strategy, and execution.
VKT boasts a proven track record in achieving a high EDG application success rate with up to 80% funding. This maximum support level of up to 80% for the Enterprise Development Grant is valid till 31 March 2022. So wait no longer, and contact us for a virtual coffee chat to discover more about how you may get started your supply chain management journey today!
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