The Benefits of Effective Supply Chain Management

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Supply Chain Management (SCM) exists across three levels. In this guide, we will uncover the principles behind each of the three levels of SCM. Understanding the three levels of SCM can help us to understand the benefits of effective supply chain management. Let’s begin. 

Strategic SCM

Strategic SCM comes down to long-term strategy. For example, planning the interconnected functional aspects of the supply chain can reveal potential issues with facilities, suppliers, and any technology used in the procurement, manufacturing, and delivery stages. 

Once a business completes an analysis of all relevant elements of SCM, a picture will emerge that sets the stage for tactical and operational considerations. 

Tactical SCM

Tactical SCM concerns itself with how the supply chain will be upheld and monitored. It may be useful to think of the tactical stage as the link in the chain that helps to determine best practices and operational standards going forward. 

The goals of this tactical stage are less wide-ranging than in strategic SCM. A focus on tactics is a focus on the definitive aspects of areas such as efficiency, cost and even customer service, for example. 

Operational SCM

The operational level of SCM is a granular breakdown of the daily activities set out within the supply chain. For example, operational level considerations may concern themselves with shipping or scheduling, or even the expectations over the delivery of customer service (depending on the nature of the company). 

Benefits of SCM (at a glance)

Taking the three levels of SCM into account, we can now begin to appreciate the benefits of managing a supply chain. From procuring raw materials and deciding cost-effective manufacturing strategies to the development of expedited delivery options, a well-tuned SCM plan can bring a wide range of advantages. 

The benefits of SCM include: 

  • Relationship Management 

Maintaining relationships with all stakeholders in SCM (e.g., suppliers, distributors and retailers, consumers etc.) can reduce the risk of disruption. 

  • Raised Company Profile 

Companies that deliver goods on time and maintain supply benefit from a raised profile – consumers trust brands that they associate with consistent availability.

  • Greater Environmental Sustainability

Where supply chains and logistics benefit from streamlined operations, the environmental impact is minimized (e.g., fewer road journeys). 

  • Greater Financial Stability 

Efficient SCM results in the analysis and control of potential barriers to cash flow. The expedited removal of issues helps to secure greater levels of financial sustainability.

  • Minimize Overhead

SCM aims to identify what is necessary and what is not necessary as part of production and delivery. Removing unnecessary aspects saves money. 

  • Accountability (across departments)

SCM can help to highlight any flaws within the supply chain. Where certain departments are identified as costing excess time or money, solutions can be found.

Understanding the benefits of SCM can also help to highlight where temporary measures outside of the norm may be of wider benefit. For example, if a consumer base requires vaccines to be stored at low temperatures near large population centers, the supply chain will need to adapt accordingly and find ways to absorb those storage costs. 

 

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