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Anurag Pandey
Student (University), United Kingdom
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Importance of Supply Chain Management
Can anyone explain to me: What are the reasons why SCM is important?
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Michel Berscheid
Manager, Luxembourg
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Why SCM is Important
Hello, some reasons include:
- Globalization
- Increased cross-border sourcing
- Collaboration for parts of value chain with low-cost providers
- Shared service centers for logistical and administrative functions
- Increasingly global operations, which require increasingly global coordination and planning to achieve global optimums
These trends have many benefits for manufacturers because they enable larger lot sizes, lower taxes, and better environments (e.g., culture, infrastructure, special tax zones, or sophisticated OEM) for their products
SCM for me is the whole of competences for the a design, planning, execution, control, and monitoring of supply chain activities which gives you the opportunity to achieve better coordination and collaboration with all parties involved.
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Anonymous
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Why SCM is So Important
There are at least 3 main reasons why Supply Chain Management is very important:
- IMPROVE CUSTOMER SERVICES
- Customers expect to receive the correct product mix and quantity to be delivered on time. For example, if you buy 6 books from an online shop and only 3 of the books actually arrive, one is an entirely different book and 2 are missing, you will lose faith in that shop and might leave a bad review.
- Products need to be on hand in the right location. Customer satisfaction is tarnished if your car’s brake pads fail and the auto repair shop is delayed in making the repairs because parts are not available in-house.
- Follow up support after a sale must be done quickly. When an appliance store sells a furnace with a warranty and it breaks down when temperatures are below freezing, it is a great possibility the customer will be irate if the heating unit cannot be fixed immediately.
- 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 tens 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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