The world runs on logistics. Without the supply chain and the infrastructure that supports it, everything we know would collapse. Producers, manufacturers, and even utility companies wouldn’t be able to get what they need to create products or provide services such as electricity. Grocery store shelves would be empty as farms, ranches, and fisheries can’t get their goods to the hungry masses. We wouldn’t be able to get fuel for our cars since there’d be no tankers to bring gas to the station.
Though this might seem like a doom and gloom scenario, there are plenty of professionals and experts in the supply chain sector to keep everything moving as smoothly as possible. One way to do that is through effective supply chain management. But even if you don’t work in the logistics industry, there are plenty of things your business can do to play its role in keeping the supply chain strong.
In this article, we’ll explore what the supply chain is and the ways its proper management can benefit your business.
What is Supply Chain Management?
You can think of the supply chain as the lifecycle of any goods you care to name, from their rawest state to the final products they’re made into. Supply chain management, then, is the organization of these processes to make them more efficient – and to keep everyone within the chain happy.
When the supply chain is managed properly, production and shipping costs remain low, deliveries happen quickly, and the whole product lifecycle keeps humming along. When the supply chain starts developing weak links, however, the whole thing threatens to fall apart. If you’re looking for examples of that, the post-pandemic world is filled with them.
Indeed, empty store shelves, late deliveries, and even price inflation can be caused – at least in part – by supply chain problems. It’s crucial then to make sure the chain doesn’t fall apart.
Common Parts of the Supply Chain
No matter what industry you operate in, the supply chain has five major components:
- Production & Supply: the chain begins with a person or company that produces raw materials, such as an iron mine, a lumber mill, or a farm.
- Manufacturing: the raw materials are then turned into other products; lumber, for instance, can be processed into wood planks for construction and assembly, pulp for paper products, mulch for landscaping, and so on.
- Distribution & Transportation: to move goods throughout the chain, you need transportation – trains, planes, trucks, and ships – to get them from point A to point B.
- Retailing: once the goods are created, they need to be sold to consumers; this can be either in a business-to-business (B2B) configuration (perhaps as a wholesaler) or business-to-consumer (B2C) where you’re selling to the average customer.
- Purchasing: this can happen in-store or online, but it’s the final link in the chain that gets the product from the retailer to its final destination.
It’s important to note that, while the five components above are a great model, how the chain looks depends on your business. For example, if you own a bakery, your chain might start with the farm that grows your wheat, that’s then processed into flour, delivered to your bakery where you make bread, cookies, and cakes, and you sell them to your customers. However, if you’re the farmer, your supply chain might start with your fertilizer and seed suppliers.
Despite its name, the supply chain isn’t linear; instead, it’s an entire web that overlaps, intersects, and loops around itself. This is why even one weak link somewhere within this structure can cause major problems down the line and back again.
Benefits of Supply Chain Management
Great supply chain management stems from clear communication across the chain based on trust, transparency, and flexibility in whatever the market’s doing at a given time. As you get better at managing your own links in the chain, you’ll be able to enjoy a few advantages over those who neglect it. Here are a few:
Improved Efficiency and Cost Savings
If you know where your merchandise is going, what volume and speed it’s moving in, and have optimized the path as best as you can by choosing the right transportation and routes, you’ll be able to drive your costs down and speed up the process. Faster deliveries mean happier customers, in turn producing more money through their return business and referring you to their friends.
Enhanced Collaboration and Partnerships
The reason why the supply chain is called a chain is that it’s only as strong as its weakest link. Moreover, if no trust exists between them, the chain won’t function properly. By putting an emphasis on supply chain management, you’ll develop stronger partnerships with everyone else up and down the line by necessity. As mentioned earlier, since everything’s connected and tangled up in a ball called the economy, one problem can spiral out of control as it ripples across the chain.
Improved Customer Satisfaction
Just as you’ll enjoy better relationships with your logistics partners and suppliers, good supply chain management includes happier customers as well. People love being able to buy what they want and get it home in the time they’re expecting it – whether they’re bringing it home themselves or eagerly expecting it to be delivered. Supply chain management makes it easy to follow through with customer expectations and allows you to effectively problem-solve and provide better customer service.
Better Flexibility and Adaptability to Market Demands
That same visibility allows your business to adapt quickly to anything the market throws at you. Whether it’s a shortage in raw materials, new regulations, a massive accident involving a shipment (such as a traffic jam in the Suez Canal), or just trying to cope with the holiday season, supply chain management gives you all the information you need as quickly as possible to make snap decisions and mitigate problems.
Better Sustainability and Social Responsibility
Just as supply chain management requires great relationships with other people and businesses, it also incentivizes us to have a great relationship with our planet. Effective supply chain management can have a wide-reaching sustainability impact from using fuel-efficient vehicles and choosing the best routes to minimize time and fuel use. This, in turn, lowers your company’s carbon footprint while boosting your profit margins – a win-win that also acts as its own marketing perk, further increasing customer satisfaction and loyalty.
Improve Your Supply Chain Management with UCanTrade
Keeping the supply chain moving is important, regardless of your business or industry. However, it’s understandable if all those moving parts can be overwhelming, especially when you’re just trying to make ends meet. Here at UCanTrade, we specialize in supply chain management strategies for every business. If you need help or want to learn more about improving your efficiency and saving money on logistics, reach out to us today or send in a service request form and we’d be happy to show you how.