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importance of supply chain managementAn efficient supply chain is one of the most underrated and misunderstood aspects of business management. Your supply chain, which can be quaint and local or multi-organizational and global, controls the flow of products and information and, therefore, the flow of capital.

At this point, the importance of supply chain management (SCM) should be self-explanatory: to streamline and manage this vital process. But there’s a lot more to it than that, from customer satisfaction to lending a hand in global emergencies. Read on to learn the essentials and take your knowledge to the next level with this comprehensive course on supply chain management in retail.

Customer Appreciation

At the far end of the supply chain is the last component: the customer. This is where the supply chain ends. A supply chain is not an assembly line; it is not one physical place. It is a structure of materials, ordering, supply, partner organizations, analytics, demand, and as many other aspects as a company feels that it needs. But the supply chain ultimately exists to serve the customer.

A properly managed supply chain delivers the highest quality products on time to its customers. There can be no delays with the shipping companies; there can be no delays with the materials manufacturers; there can be no delays, period. All of this is controlled by the supply chain manager, who will, from time to time, have to confront the fact that something went wrong and deal with fixing customer satisfaction.

Supply chain management requires an enormous amount of interpersonal skills. In fact, customer support is one of the most important parts of the job. A well-oiled supply chain means happy customers. Learn more about what it takes to be successful at SCM with this complete supply chain manager job description.

The Bigger Picture

Where many businesses and supply chain managers make their mistake is directing the majority of their concentration within their own company. Don’t get me wrong, this is a wise place to use resources. But SCM is only functional when the bigger picture is considered.

It’s an old saying, but it’s true: a chain is only as strong as its weakest link. Supply chains are no different. Every component must be considered as vital as every other component. The responsibilities of your partners and suppliers are of the utmost importance. If one component lapses, the entire chain lapses and the customers immediately feel its affects. This article on the 6 best supply chain strategies can help you adapt to any situation, whether planned or completely unexpected.

Supply chains are not of the set-it-and-forget-it variety. They need constant maintenance and comprehensive care. It is the supply chain manager’s responsibility to ensure that a company’s partners are withheld to the same high expectations.

The Bottom Line

You’re kidding yourself if you don’t think SCM affects your bottom line. An excellent supply chain will decrease costs by astronomical proportions (you can bypass building factories and warehouses, and purchasing methods of transportation, by making partnerships). And when your product delivery is designed for efficiency and speed (and correctly proportioned through analytics), you move the most amount of product in the shortest amount of time by spending the least amount of money. It’s a win-win-win situation.

But don’t worry if you aren’t a pro at analytics. You can pick up all the skills you need in seven short sessions with this sales forecasting prediction course.

SCM: Bigger Than Business

Interestingly, SCM is a critical aspect of civilization. The largest supply chains in the world are marvels of coordination and teamwork. Brilliant SCM allows companies to grow internationally; sure, not all companies have their interests in the right places, but SCM is a vital tool for those who are trying to make a global impact for good.

It’s definitely nice when the price of gas stays low, and this is undoubtedly a result of excellent SCM. But it’s natural disasters and the global community that need it the most. When tsunamis arrive unexpectedly, when tornados appear relentlessly, when hurricanes hit land, when drought persists, these are the times when all the thought and resources companies have poured into SCM pay off in the greatest way possible. Supplies can be directed to where they are needed at rates that even surprise the people who designed the supply chains, and that’s a beautiful thing.

You can get practice solving the world’s biggest problems with this awesome simulation course on how to build and test supply chain models in Microsoft Excel.

Page Last Updated: February 2020

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