Top 10 Advantages of Supply Chain Management

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Every product goes through quite a long journey before it can reach the end customer. At first, the goods were just raw materials. Manufacturers used those raw materials to produce the goods. After that, they go through several quality checks, inspections, and temporary storage before finally reaching the customers.

Every single step mentioned above is an integral part of the supply chain. The supply chain management process ensures that every component flows smoothly to increase a business’s productivity while saving time and minimizing operational costs.

And those are just a few of the many advantages of supply chain management. As the global supply chain market is expected to reach $31 billion by the end of 2026, every business with ambitions to grow and increase its profits needs to pay more attention to it.

The evolving consumer demands coupled with increasing competition in the logistics market make it crucial to deploy a well-planned, lean supply chain. Paired with automation, this ensures that the supply chain management is cost-efficient and provides a competitive advantage over other brands.

This blog will explain what supply chain management means, its biggest challenges, and how it can benefit companies across all industries. 

What Does Supply Chain Management Mean and Why Is It Important?

Supply chain management refers to managing the whole production flow of products or services, starting from the unprocessed ingredients to the final product delivered to the customers. The supply chain management consists of a network of stakeholders moving the raw materials from one supplier all the way to the organizations that deal with the finished goods and the end customers.

Supply chain management is a crucial part that keeps the businesses of any industry moving. That’s why when one or more parts of the supply chain slow down or are not optimized; it hinders the overall growth of the organization. 

On the other hand, efficient supply chain management can minimize costs (production costs, delivery costs, maintenance costs, etc.) and save a lot of time in the production cycle. As a result, retailers can send replenishment requests to the manufacturers quickly, warehouses can be restocked as soon as goods are sold out, and businesses can enjoy many other advantages of efficient supply chain management.

These days, companies are increasingly introducing lean supply chains to their operations. This cuts out redundant processes and portions from the overall supply chain life cycle, making supply chain management even more effective. It significantly helps reduce inefficient logistics processes, unplanned expenditure, and minimize time consumption. 

Supply Chain Management: What Role Does Automation Play?

Manually managing important supply chain processes like inventory counts and Excel sheet updates are outdated, inefficient, and detrimental to any business. With supply chain automation, businesses can use advanced technologies to streamline the elements of supply chain management without requiring constant human attention or effort.

It speeds up an organization’s workflow and makes the overall supply chain management procedures well-organized and efficient. Let’s see what role automation plays in supply chain management.

Automating Manual Tasks

With supply chain automation, supply chain professionals can automate repetitive and time-consuming tasks and put their focus and efforts into the work that actually needs their attention.

For instance, repetitive tasks like invoice generation, assigning pickup slots, daily reports, or processing orders can take too much time to finish. With advanced technological solutions that offer AI-based automation, these tasks can be automated so the workforce can focus on more productive tasks.

Minimizing Human Errors

Let’s face it – humans make mistakes unintentionally. If repetitive tasks are delegated to the employees to work on them manually, no matter how careful they are, something can always go wrong.

With supply chain automation, businesses can eliminate the risk of human errors while dealing with time-consuming and boring tasks. A few key mistakes that automation can prevent are as follows:

  • Accidental duplication
  • Incorrect data entry or order information
  • Selecting the wrong items for an order
  • Entering incorrect customer data like phone number, address, email, etc.

Increased Supply Chain Visibility

Maintaining real-time supply chain visibility requires the investment of labor, uninterrupted connectivity, and solid commitments from suppliers, manufacturers, service providers, and merchants. 

An automated supply chain enables businesses to monitor the supply chain process and automatically update necessary information in real-time. It allows the relevant stakeholders to track inventory, access required information, and communicate with the workers performing various supply chain duties. This is another one of the most crucial advantages of supply chain management.

The increased visibility also helps businesses identify and solve the logistics and production cycle bottlenecks to prevent delays, minimize supply chain disruptions, and improve overall efficiency.

Improved Customer Experience

As automation streamlines the supply chain processes, the end customers can reap multiple benefits. Such automation enables accurate order processing and fulfillment, resulting in faster shipping. 

This allows businesses to maintain customer satisfaction by improving overall customer experiences. It helps generate customer loyalty in the long run.

With automation, companies can enjoy many advantages of supply chain management, such as an efficient production line, improved delivery output and much more. 

Next, we are going to look at the major hurdles prevalent in the supply chain management journey. 

What Are the Biggest Challenges in Supply Chain Management?

The advantages of supply chain management can be reaped only if businesses can identify the key challenges of the supply chain and work diligently to solve them. Let’s take a look at some of the biggest challenges of supply chain management every business needs to be aware of.

Unexpected Delays

While procurement of raw materials and products may be relatively simple, delivering goods from one place to another is not. In fact, large-distance deliveries and shipments have to go through multiple checkpoints, increasing the chances for unexpected delays, like customs detainment, accidents, and more.

Cost Control

With multiple moving parts, controlling the logistics costs, delivery costs, transshipment costs and other such operational costs become a challenge. Further, the inability to manage and monitor all the processes and people in a unified manner increases the operational complexities.

Risk Management

The continuous shift in the global market because of ever-rising consumer demands, sourcing, and many political agendas can cause unexpected interruptions in business operations. However, the disparate nature of the supply chain ecosystem makes it hard to manage, monitor, and contain business risks. 

Qualified Personnel

As the global supply chain market is constantly growing, companies are trying to recruit as many qualified personnel as possible who are competent across different levels of supply chain management. 

However, the supply of qualified professionals is having a tough time keeping up with the demand. As a result, hiring dedicated staff has become a big hurdle for many companies.

Collaboration of Data Across the Supply Chain

If a business wants to manage its supply chain efficiently, all the related stakeholders need to have access to the relevant supply chain data. As supply chain management contains multiple fragmented data points, the collaboration between different supply chain processes and their data becomes challenging.

Top 10 Advantages of Supply Chain Management

Supply chain management is necessary for the success of companies of all shapes and sizes. It allows businesses to gain a much-needed competitive edge by reducing multiple risk factors during material procurement, manufacturing, and shipments.

Let’s take a look at the top ten advantages of supply chain management below:

Increased Productivity

Companies can predict customer demand and deliver them only if their supply chain procedures like resource procurement, logistics, and even delivery are planned and executed well. This helps businesses adapt to changing market conditions, disruptions, and ever-shifting business trends.

With access to real-time data, organizations can easily reduce manufacturing and shipping delays. Similarly, supply chain automation helps increase the overall productivity of the rest of the supply chain processes. 

Reduced Cost

Reduction of operation costs and increased profits are some of the most crucial advantages of supply chain management. Be it eCommerce or manufacturing, companies can always evaluate the current processes, figure out existing flaws, and address the same to optimize the flow. 

As the process improves, the production of goods will become smoother and more efficient, allowing organizations to reduce overall production costs. 

Better Risk Management

Analyzing the supply chain data at both macro and micro levels allows companies to find out potential risk factors and devise plans to eliminate them as soon as possible. Businesses can prevent many unforeseen accidents like quality control issues and supply chain disruption by actively exposing the risk factors and proactively taking action against them.

By monitoring these risk factors and taking proper precautions, companies can make their supply chain more resilient and efficient. Also, it allows companies to have corrective solutions ready for potential future disruptions.

Customer Satisfaction

One of the key advantages of efficient supply chain management is the ability to identify the reasons that are affecting the overall CX. Further, automated supply chain management empowers businesses to share real-time updates and automated alerts with the customers. There are proper checks for delivery/cancellation validation and customer feedback authentication.

Developing an efficient supply chain management system allows every organization to streamline the forward and reverse flow of goods. This helps create priority customer service and, leaves a positive impact on existing as well as new customers.

Better Professional Relations

With accurate data, supply chain managers can choose the right suppliers and distributors for the business. This helps with increased productivity, reduced costs, and long-term sustainability.

They can reduce the costs of services without having to haggle over the prices and without violating the volume commitments. Businesses can ensure highly transparent transactions, contracts and also leverage solutions with blockchain or decentralized ledgers to ensure highly trustworthy information sharing. 

Quality Assurance

Without a proper system in place, businesses might face a rise in defective products and failed deliveries, causing the operation cost to spike. One of the advantages of supply chain management is the incorporation of optimum quality assurance systems and efficient business operations.

This is especially important for businesses that have distributed their production operations between multiple states or countries. As different places might have different quality standards, it becomes extremely difficult for the headquarters of the companies to maintain proper quality control.

Continuous Cash Flow

With supply chain management, businesses can make informed and data-driven decisions and build profitable relationships. Using advanced tools and SCM software, businesses can perform predictive analysis, identify potential risks early on, and proactively step up to deal with them.

As a result, businesses can not only save money on overhead costs but can also improve their overall cash flow, which helps with operations. Efficient supply chain management and continuous cash flow can make the supply chain more productive, helping the business grow in the long run.

Controlled Inventory Management

Every business that deals with supply chains always tries its best to reduce waste, which can be achieved by controlling overstocking inventories. Overstocking can increase the overall inventory cost and can cause the wreckage of unused goods. Meanwhile, understocking can result in fulfillment failure, causing severe loss of revenue.

Supply chain management ensures that a business’s warehouse and inventory are properly managed, reducing overstocked inventory costs and avoiding fulfillment delays because of understocking.

Shipping Optimization

Due to increasing fuel and maintenance costs, shipping optimization has become one of the key concerns of supply chain managers. Finding out the most efficient shipping methods for packages of different sizes, like small parcels, and large bulk orders, helps companies minimize shipping costs and reduce delivery fulfillment times.

Reduced Delays

Efficient supply chain management means uninterrupted coordination between different departments, real-time supply chain visibility, quick decision-making, and swift elimination of problems causing operational disruption. 

This will allow the goods to travel from one checkpoint of the supply chain to another smoothly, reducing the number of production and delivery delays significantly.

Choose Shipsy for AI-Powered End-to-End Supply Chain Management and Optimization 

Shipsy offers intelligent supply chain management and optimization software that enables companies to achieve cost-effective, seamless, and efficient business operations across their supply chain networks. 

The AI-powered logistics management software comes with intelligent quote management, automatic error detection, predictive alerts, incidental costs alerts, fleet management, and many other capabilities. 

Businesses can gain end-to-end visibility to all their supply chain events, including imports, exports, invoicing, task allocations, volume analysis, and more, from a single dashboard.

With Shipsy’s AI-powered end-to-end supply chain management software, the clients have experienced the following:

  • 34% reduction in incidental costs
  • 56% decrease in man-hours for shipment handling
  • 45% reduction in order allocation time
  • 24% increase in on-time deliveries

Get in touch with our experts request a custom demo today to experience how Shipsy’s AI-enabled agile supply chain management software can help businesses flourish!

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