importance of supply chain management

Importance of Supply Chain Management

Running a business it’s not an easy job.
You as the entrepreneur and business owner must be on top of everything and must know everything there is on how to satisfy your customers.

And part of keeping your customers happy means having all your products in stock regularly. And having no inventory issues requires good supply management skills.

Read more the learn more about the importance of supply chain management and how can you be on top of it.

What is a supply chain system?

The most simple definition will be – activities required by the organization to deliver goods or services to the consumer. By supply chain management we can understand an entire system of producing and delivering a product or service, from the very beginning stage of sourcing the raw materials to the final delivery of the product or service to end-users.

All the aspects of the production process, activities involved at each stage, information that is being communicated, resources that are transformed into materials, human resources, and other components that go into the finished product or service forms the supply network.

The supply chain enables you as a business owner to understand others that are involved in each of the phases of production, and from there you will also have inside information on what’s attractive at the moment. 

Activities related to supply chain management are one of the core activities and goals of operations management. Your operations management team will play a key role in the supply chain and logistics. They will ensure the movement of raw materials and make sure the finished goods reach the customers in a timely manner.

The goal is to look at the entire supply chain and make sure that all the processes and systems are set in place.

Key steps of Supply Chain Management

How is the operations team managing the supply network?
They need to ensure the key steps are taken so the finished goods arrive to the customers.

These key steps include:

  • Planning the inventory and manufacturing process to ensure supply and demand are balanced
  • Manufacturing or sourcing raw materials
  • Turning those materials into basic parts
  • Assembling parts and testing the product
  • Packaging the product for shipment 
  • Transporting and delivering the finished product
  • Order fulfillment and sales
  • Providing customer service support for returned items

In today’s world mapping out the supply chain network is crucial to the business. We can talk about different kinds of supply chains needed to satisfy different business sectors and different stages of business development.

Traditional vs E-commerce Supply Chain Management

We can see different ways of managing the supply chain in the e-commerce business and the traditional business. 

When making this comparison between traditional and e-commerce companies, we need to note that the first steps are the same for both of them. The supply chain begins with the sourcing of raw materials. They are then taken to a manufacturer that processes them into a finished product and packs them. 

In the traditional business, the product goes to a distributor that wholesales the finished product which is next delivered to a retailer. The retailer sells the product in a store to consumers. Once the consumer buys it, this completes the cycle. It’s the demand driven by customer satisfaction and marketing efforts that then goes back and drives the production of more raw materials, and the cycle continues. 

But in an e-commerce company that sells various products, when the order is placed it’s being processed by software. Most common are the checkout carts or a third party like Shopify. The payment processors came in and made the transaction.

This is where a new step in the supply chain is introduced with e-commerce businesses. Mainly when a product order is placed, the warehouse receives the order and makes sure the product is ready for delivery.

The warehousing company can be either in-house or a third-party logistics provider. The order is then taken by the shipping company, which delivers the goods to the customers.

Importance of Supply Chain Management

Today, we live in a new reality driven by the events and rules that change daily and sometimes hourly. This means that the supply chain management systems we once had are no longer reliable. Today we are facing a lot more challenges.

First, the complexity of the supply chain and logistics itself can be challenging. Understanding the whole network takes some time and can be difficult to figure out.

The second is a potential lack of transparency, goal setting, and communication issues. Being transparent helps others understand the supply chain status.

Third, inadequate supply chain inventory and demand may leave you with excess inventory or a shortage of supplies. This can lead to unsatisfied customers and business partners.

The operations team you have needs to easily adapt to the growing and constantly changing market. Recently we are facing a lot of shipping setbacks due to the increased number of products sold online, which can lead to losing or delaying some of the products needed.

Goods that go missing at any point in the chain ultimately delay the whole process.

External factors can cause unforeseen changes in a supply chain too. The best practice is to prepare the best way you can for the unexpected and be able to pivot if need be.

Having a clear overview of the supply chain system established in your company is one of the critical steps in performing an external analysis in a strategic planning process.

The importance of the supply chain is that it helps you define the marketplace and decide where you want to be in the future. Your relationship with suppliers is really important, it can help you shorten your production cycle. As a business owner, you should aim to keep these cycles as short as possible. This way you will meet your customers’ expectations and grow your business. 

Here at AMZ Operations, we understand the importance of supply chain management. We take care of the inventory using top-of-the-line software and manual tracking which give us the assurance that everything is running smoothly.

We want to relieve the sellers of having to spend time on tasks related to tracking, ordering, fulfilling, stocking, etc. The business owner’s time is the most important asset, and that’s what is going to propel the Brand on Amazon, not the fulfillment of the everyday, mundane, operative tasks.

If lack of time or clarity sounds like the missing piece that’s causing your business not to grow, or you simply want more time for you, your family, or hobbies, please schedule a call with us to find out how we can help.