Succinctly, objectives of supply chain management (SCM) involve the procedures entailed in the formation of finished products from raw materials and processes bordering the management of the flow of services and goods. With greater use in manufacturing industries, say in electronics and automobiles, SCM has been utilized by businesses for decades as it reduces unnecessary and excessive supply activities for profit maximization.
Meanwhile, SCM benefits are not as pronounced in other industries like the hospitality and gaming industries. The indispensability of uses of supply claim management is mostly evident during economic downturns when revenue generation becomes uptight, and the promotional/marketing system gives lesser output. For instance, through the years, sites like NetBet have utilized robust supply chain schemes to reduce the cost of operations and sustain customer friendliness and relationships in unfriendly markets.
Meanwhile, SCM has vital objectives that are likewise useful for International Logistics. Some of these objectives of supply chain management are discussed subsequently.
Objectives of Supply Chain Management
1) Generating Revenue and Sustaining Value
The profitability of the supply chain is obtained by deducting the costs incurred by the company in producing and supplying products from the amount customers paid to access the services and products. One indicator of SCM success is increased SCM profit. Whereas, the sole source of revenue is from customers. In this regard, SCM searches for newer customers by utilizing proper channelling of information and product flow. The awareness-creating nature of SCM ensures that customers are brought to terms with newer products and changing distribution terrains.
2) Restocking Products and Fulfilling Demand
As described by TheWallStreetJournal, the supply chain of the globe is embracing more intricacies and there is a heightening accompanying risk. Despite the uncertainties, as means of fulfilling the demand of customers, product scarcity or unavailability is always forestalled. Depending on the replenishing scheme for a particular material, product or warehouse stocking system, supply chain management functions in restoring the stock levels to at least, the permissible minimum level.
3) Delivery speed and Efficiencies
At every level of the supply chain, SCM helps maintain efficiency and reduces the time taken for distributors and marketers to receive an order and make deliveries. In addition, there is better distribution of the product with efficient management. This results in a consequent reduction of company costs required to service benchmark. Amidst others, spheres like transportation, manufacturing, and fixed assets experience company cost reduction.
4) Inventory Effectiveness and Flexibility
Every supply chain would run into crises without proper documentation of the pre and post-production inventories. SCM helps oversee the stock inflow and outflow and other conditions surrounding production. There is a flexibility attendant to quality SCM as non-rigid control mechanisms are incorporated, and planning becomes easy.
5) Returns and Coordinating Logistics
SCM is broad-faceted, and the purchasing, planning, and transportation aspects are all found within the logistics system. Considerations of how products get couriered to different parts of the globe and how customers would return products they’re unsatisfied with are a part of the SCM. Thus, SCM fulfilment centres are sited at strategic locations to weigh in on the satisfaction of the consumers.
6) Systems and Machinery
While some organizations use the labour force heavily in performing services, increasing technology is causing transmogrification. Disruptive technologies like AI, robotics, and automation are garnering greater incorporation. As a result, there is a reduction in human interventions and resultant supply chain mistakes as technology enhances efficiencies. The role of SCM stems from the need to supply sufficient technology for all technology-requiring processes. Supply chain departments hold the objectives of ensuring smooth operations by weighing the advantages and risks associated with machinery and new technology.
The overall advantages of SCM would culminate in competitive advantage and optimization of business performance if understood well. The need to understand and comply with the SCM framework and quality standards for an organization always exist. Implementing the concerned frameworks is achievable through uses of supply chain management and without lowering the bar on customer satisfaction and service.
We hope that this blog post has helped explain the objectives of supply chain management. ZapInventory is an integrated, multi-channel inventory management software for businesses of different sizes, especially eCommerce businesses to help them manage their inventory across all their sales channels. It’s got some super cool features like order management, warehouse management, purchase order management, accounting & invoicing, and reports & analytics. They also offer a FREE trial of the platform, and if you’d like some additional help in getting to know the platform, just schedule a call here.