Supply Chain – A Very Important Part ofthe Business to Be Maintained
A supply chain refers to a system of people, organizations, information, activities and resources involved in transporting a service or product to customer from supplier. The management of supply chain is cross-functional approach.
supply chain management is a cross-functional approach that includes managing the movement of raw materials into an organization, certain aspects of the internal processing of materials into finished goods, and the movement of finished goods out of the organization and toward the end consumer.
Importance of Supply chain
The supply chain management in most businesses is an integral part and this is a must to ensure customer satisfaction and company success. The customers get the service quickly of the right products. Concentration is in customer satisfaction, when that is given less importance, the satisfaction gets reduced and at the same time repair work cannot be carried on for days.
Promotes Customer Service
Customers get to receive correct product quantity and assortment to be delivered. The products are available as required at the location. The customers get delivery as required on time and there is customer satisfaction. For instance you can understand that on December 26, Christmas presents are delivered and the Pizza delivery is done on time and not two hours later.
Reduces Operating Costs
Reduction in Purchasing Cost – The retailers basically depend on the supply chains to deliver quickly expensive products so that it is able to avoid holding costly inventories any longer in stores than necessary. For instance, the electronics stores need fast delivery of plasma HDTV’s60” flat-panel to prevent high inventory costs.
Reduction in Production Cost – Manufacturers rely on supply chains to deliver materials to avoid material shortages such that they do not shutdown the process of production. For instance, an unexpected shipment delay may cause an auto assembly plant to literallyshutdown and it can cost per minute and result in a loss of millions of dollars per day as the lost wages.
Reduction in Total Supply Chain Cost – Retailers and manufacturers rely on supply chain managers for designing the networks to meet customer service goals in minimal total cost. Thus, efficient supply chains make a firm in the market place to be competitive. For instance, the computer supply chain of Dell is an approach involved in makingas per specific customer order. Owing to this, Dell avoids having large computer inventories in warehouses or even in the retail stores and thus saves millions of dollars