In recent times, as the business organizations struggle hard to survive and thrive among their competitors, supply chains play a crucial role aiding to the company’s success and customer satisfaction. Supply chain management not only improves customer services by ensuring the proper delivery of the products on time but also improves the final standing of the company by decreasing supply chain expenditure in order to leverage profit. An efficient management of supply chains also works towards reducing operating costs by decreasing production costs, total supply chain costs, and production costs. According to a survey report by Deloitte in 2014, while 79% of the companies with proficient supply chains achieve more than average revenue growth, only 8% of the companies with incompetent supply chains are reported to have above-average growth. Irrespective of their size, approximately 50% of businesses close down within 5 years of their commence highlights the fact that poor supply chain performance contributes to the demise of companies or business failure.
Given below are a few points which will help us to understand why the optimization of supply chain is essential for the growth of a business:
- Thinking Strategically about Supply Chain: A supply chain council is needed to be established which should be appropriately and thoughtfully staffed in order to maximize the company’s investment in infrastructure, assets, and technology. The team should not only work towards global opportunities for the procurement of goods and services but also the global needs of the organization.
- Focusing on Core Competencies: Quite often the internal resources of an organization do a better job for a short run project whereas, for the long run, a specialized third might be a better option. This inventory control planning will certainly prevent the expenditure of outsourcing human resources from a third party which the company has in current possession.
- Improve Collaboration between Supplier and Retailer: For inventory management and demand data-driven forecasting, it is obligatory to maintain a healthy supplier and retailer relationship. This will ensure the constant review of procedures and policies to ensure agreement, effectiveness, and currency while mitigating any possibilities of theft or fraud. Proper communication between the supplier and retailer team tends to avoid any kind of problems regarding the lack of follow-through on contract compliance.
- Identifying and Utilizing the Technology: Supply chain leaders must be able to discover the technologies that are making a way in the supply chain which is not only essential for better demand and response creation but also improves efficiency with the automation provided by technology. The main challenge which lies ahead of the supply chain council is to recognize the areas which are producing below standard and selecting the required technology such as AI, IoT, advanced analytics, robotic process automation, etc.
- Build a Responsive Supply Chain: The organization should work towards creating an effective supply chain that will not only meet the customer demand and planning but will also work towards responding sooner to increase sales, progress service levels and reposition inventory to capitalize on true remuneration. A best in class supply chain should have a considerable framework of procedures and policies planned to work towards the betterment of employees as well as the organization.
With the surfacing of disruptive supply chain technologies like AI, advanced analytics, Internet of Things and Robotic process automation, organizations must establish the implications of those technologies to enable the future of supply chain improving its ability to sense and shape demand. With an ability of strategic network design, responding to customer demand, handle transactions and payments, these technology trends not only provide a competitive advantage but potentially create high transformational business benefits.