To remain competitive, it is important that companies provide goods and services at the lowest possible cost. Effective management of the supply chain will reduce the time to market and reduce supply chain cost. The reduction in cost can be used by the company to create a competitive value proposition and allow the company pass a reduction in cost due to supply chain savings, to the customer.
Effective supply chain management involves identifying those processes that reduce efficiency and increase cost without increasing the value proposition to the customer of the product or service. Reducing unnecessary supply chain cost ensures organisational functional processes are integrated and that goods and services that travel the companies supply chain, flow smoothly and are not impeded. This ensures that the organization’s processes flow smoothly and goods and services are made available to meet customer demand as quickly as possible. This can mean companies are able to get their products to market quicker than their competitors.
Effective supply chain management will foster a close working relationship with suppliers and internal departments, ensuring the timely fulfilment of customer orders. Being responsive to customer requests and supplying goods and services on time will allow the company to increase sales and increase market share. Supply chain management transforms the traditional linear supply chain process into a dynamic integrated process that is adaptable and responsive to changing customer demand. This agile supply chain management process will allow the company to capitalise on new market opportunities.
Supply chain management is one of the most effective ways of increasing company profitability as costs are kept as low as possible. Information transparency and real time business intelligence can reduce the order to cash cycle, reduce inventory levels and increase inventory turnover at a lower total cost. Supply chain management ensures lower operating cost with more effective and efficient planning between each stage in the process.
