In the complex design of modern businesses, where products and services travel across the globe. One strong force that binds all the processes together is – supply chain management. The product or service that reaches your doorstep without any struggle is not any magic, but the well maintained supply chain management. But what’s behind this chain management that keeps working? Here are 8 most crucial objectives of supply chain management, that guides the proper working.
The proper management of these objectives can take a business or a company on its peak, and achieve success. These objectives when achieved can unlock the success paths, customer satisfaction, and an upper hand in the competitive market.
Before getting into the objectives, let’s first know about supply chain management!
What is Supply Chain Management?
At the basic level, supply chain management is the strategic and systematic coordination of a network of interconnected activities, starting from the development of the product or service from its raw stage to the final delivery of the product/service to its final stage.
The primary and foremost objective of supply chain management is to make right and efficient use of these processes, ensuring that the product/service is available in the right quantities, delivered at the right time, and maintaining costs and customer satisfaction along with it. Supply chain management is the magic hand that accelerates the growth of the manufacturing sector.
Within the pool of supply chain management, there lies the diverse group of suppliers, manufacturers, distributors, retailers, and at last the final receiver – the customers.
Here are the 8 most crucial objectives of supply chain management!
Efficiency & Cost Reduction
The foremost objective of supply chain management is to optimize the processes and operations for the maximum efficient results. This can be done through streamlined processes, by developing new technology and automation, collaboration and communication, and with continuous improvement.
The cost reduction factor helps to minimize unwanted costs, and businesses or companies can increase their profits in the competitive market.
Cost reduction is vital for the businesses as it can gain significant competitive advantage and can lead to high profitability. For example, companies like Intel and Amazon have successfully reduced costs in their supply chain management by adapting new technologies, automation, that has facilitated its growth and efficiency.
With time customer expectations are reaching new heights, and delivering on time and meeting standards has become crucial. A well maintained supply chain always ensures that the products or the services are available and delivered at the right time, when the customer needs it. This in return increases customer satisfaction, loyalty and brings recognition to the brand in the terms of quality standards.
It is about creating a seamless and hassle-free experience at every point for the customer, from the initial order till its delivery. This includes reliable deliveries, quality assurance, transparency, customization, easy returns, and good customer support.
For example, companies like Reliance Jio, Nike, Adidas, etc, ensures to maintain a good customer relationship and provide good customer service for their products and services.
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To deliver the best quality products and services that meet the quality standards is one of the major objectives of supply chain management. This is just not a mere objective, it’s a commitment to the promise of efficiency and excellence of products or services quality.
It is important as it provides customer loyalty to the business/company, brand reputation, quality standards, assurance, need of improvement, customer feedback, to name a few.
With new technology, it provides more visibility and coordination in the supply chain, and helps in identifying issues quickly. For example, companies like Lenovo, Colgate, Nestle, etc. are continuously implementing new procedures and methods of supply chain management to increase customer relations.
This factor is essential for the cost control factor in supply chain management.
This helps in maintaining a balance between having enough inventory/stocks to meet the demands of the customers and to avoid the overstocking, which can lead to extra costs. Inventory optimization helps in tracking products/services from the manufacturer till it reaches the final point. This helps in maintaining the business line, reduction in costs and preventing breakouts.
Distribution process is one of the major and prominent factors of supply chain management. This objective is fulfilled only when the customer receives what and how they need their products at their end. Distribution is termed as the last step of the supply chain and acts as a bridge between the production and the reaching the products in customers hand.
This includes customer satisfaction, cost efficiency, leads to market expansion, provides a competitive edge, etc. There are some challenges too in the distribution process like, last minute delivery, safety of products while delivering.
Improving distribution is important for customer satisfaction, market expansion, growth of the business, to name a few.
Supply chain management is open to many risks, ranging from the natural risks to company issues. Managing these risks at the right time or taking precautions is a critical step in supply chain management. For this, developing strategies, taking right measures, monitoring the process, etc. are some of the steps that should be taken to avoid the risks. The risk management ensures, the cost control in the business, customer satisfaction, continuity of operations, maintaining brand value in the market.
Risk management can be controlled by identifying risks, risk assessment, monitoring, mitigation of risks, etc.
Flexibility and Fulfillment of Demand
By adapting flexibility in the changing market for the business and for approaching customers is a must to follow in supply chain management. This objective brings flexibility in the supply chain and fulfillment of changing demands of customers.
The entire supply chain exists to fulfill the demands of the customers, and delivering what they need at the right time can lead to an increase in customer satisfaction and demands for new products and services. By increasing demand fulfillment can lead to customer satisfaction, revenue generation for the business/company, a greater market expansion, etc.
This can also be achieved through ability to respond quickly and smoothly and changing business patterns and going with the shifts in the market, and meeting customer demands.
Adaptability to Advanced Technology
By adapting new ways of technology and improving the way of doing business can lead to an effective supply chain management. This helps in reducing the need of making errors in the product management. By utilizing improving technology and data analytics, businesses/companies can make informed decisions, a good optimization of their operations, enhancement in efficiency, cost reduction, data driven decision making.
By embracing advanced technology solutions can help to achieve more efficiency in business and transform the way they work and to be in the competitive game.
Objectives of supply chain management are designed for the strategic working of the businesses. The above objectives encompass the efficiency, technology, coordination, risk factor, improved quality, customer relationship, etc. that helps in maintaining a well driven and coordinated supply chain for the businesses. These objectives can make a business maintain its brand value and to achieve new heights in the marketplace.
Achieving these objectives is crucial and essential for companies/businesses to survive in the competitive market in the current scenario.