Role Of Supply Chain Management In An Organization
As you think of the word supply chain management, what is the first thing that comes into
your mind? A systematic way to control operations, right? A supply chain within an
organization translates to a systematic way of controlling the entire production process. The
role of supply chain management in an organization is to monitor the lifecycle of raw
materials as they enter and leave the organization as manufactured products.
An effective supply chain management ensures that the company is getting all the raw
material they require for a smooth manufacturing process. Not only the quality but also the
quantity of raw material is important. The importance of supply chain management has
increased a lot, nowadays. Have you noticed how there are different brands offering
products that use the same material? For example, different manufacturers use cotton to
make hoodies, and so on. Hence, one needs to ensure that they are getting the right amount
and quality of raw material at the right time. So, you can say that supply chain management
is the survival kit for any business in today’s world.
Value Chain Vs Supply Chain
Oftentimes, people get confused between a value chain and a supply chain. Therefore, let’s
dive deeper into understanding what differentiates a value chain from a supply chain.
The first point to understand value chain vs supply chain is that a supply chain focuses on
the operations within the company. A value chain takes the pricing side of products into
observation. A supply chain includes sourcing, procuring, converting, assembling, and
logistics of raw materials. It starts from finding the best quality raw material at the most
affordable rates and then acquiring the right amount that satisfies your company’s needs.
Moreover, it overviews the conversion of raw materials into products, along with assembling
the products when necessary. Finally, delivering the products to the market; all these
operations come under supply chain management.
Value chain involves techniques to increase the value of your manufactured products.
Basically, the value chain focuses on the profit margin for any organization. To understand
the value chain in a better way, consider mobile phones. Different companies launch new
phones with almost the same features, but usually, the pricing is different. Ever wondered
why? It is because their value chain has optimized over time, and is currently more efficient
than the previous one.
Similar is the case with computers and homeware. For a company to have a better value
chain than others in the market, it needs to create a better connection between consumer
demand and the company’s production. Plus, the research and innovation part should be
covered well to keep producing market-competitive products.
How Does Supply Chain Management Add Value For Customers
A company owner knows that their supply chain can work wonders for them. The supply
chain is the game changer of any organization and boost your sales exponentially. No other
aspect of your company can match the supply chain’s influence on reaching customers,
cutting retail costs, and enhancing service levels, which means that good supply chain
management benefits both your customers and your company.
The answer to how does supply chain management add value for customers is simple. Two
factors highly affect customer satisfaction; price and delivery. By controlling these two things,
one can ensure maximum satisfaction of their customers. You can use self-assessment
metrics for enhancing the value of customers. Questions like, why did a loyal customer leave
you? Or how many customers do you get daily, and are you managing them properly?
The consumer anticipates excellent service. They’re paying you money to ensure that they
get a product on time and in good condition. If an issue arises, they expect your organization
to be transparent about why it happened. Including what measures can you take to refund
their loss? Your brand’s reputation is more vulnerable than ever before in today’s
atmosphere, when a customer may publicly attack your firm on social media.
How To Add Value To The Supply Chain
Here are some ways to add value to the global supply chain:
- Increase product offerings: you can introduce new ways to sell your products. Ever
seen the value packets of various sauces? This is an example of increasing the
product offering. You can expect better sales on such packages.
- Enhance customization: needless to say, everyone loves customization these days.
Even if it is a very small part of the whole product! So, if you have a product where
you have some margin for customization, use that to attract customers.
- Reduce suppliers: the more you reduce the number of suppliers, the easier will it
become for a customer to reach you directly. The customer will have peace of mind
regarding quality, delivery time, and pricing if they order directly from you.
- Optimize labor cost: as machinery has advanced today, automated processes save a
lot of time and money. Now, you don’t need hundreds of people to pack products.
So, if you optimize the products, it will ultimately save a big amount.
- Cater new business needs: this includes both your company’s and customer’s needs.
For example, if a new machine optimizes the processes going on in your company,
you should ensure you buy it. Plus, catering to your customers’ needs too. For
example, if you’re a biscuit manufacturer, introducing a new flavor might work well.
- Partner-up if necessary! If you feel the need of having a partner for any of the
operations, ensure to get the best onboard. Many companies partner with different
marketing companies, while others might have a marketing team within their
company. So, ensure that you have the right people for all the work that should be
done. Even if it means to partner up with another company!