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Why is supply chain management important?

Why is supply chain management important?

FUNDAMENTAL ELEMENTS

  • It meets the organizational objectives of timely availability of desired resources.
  • Sets criteria to meet the assigned targets of resource availability.
  • Opportunity to select reliable external providers inform of suppliers, vendors, contractor and outsourcing agents.
  • Peace of mind.
  • Smooth customer deliveries.

REDUCE OPERATING COSTS

  • Decreases Purchasing Cost – Retailors depend on supply chains to quickly distribute costly products to avoid sitting on expensive inventories.
  • Decrease Production Cost – Any delay in production can cost a company ten of thousands of dollars. This factor makes supply chain management ever more important. Reliable delivery of materials to assembly plants avoids any costly delays in manufacturing.
  • Decrease Total Supply Chain Cost – Wholesale manufacturers and retailer suppliers depend on proficient supply chain management to design a network that meets customer service goals. This gives businesses a competitive edge in the marketplace.

Improve Financial Position

  • Insert Profit Leverage – Businesses value supply chain managers because they help control and decrease supply chain expenditures.
  • Decrease Fixed Assets – Supply chain managers decrease the use of large fixed assets such as plants, warehouses, and transportation vehicles, essentially diminishing cost.
  • Increases Cash Flow – Firms appreciate the added value supply chain management contributes to the speed of product flows to customers.

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