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MU insights | The top 12 benefits of supply chain management

12 benefits of supply chain management

Global supply chain management has been challenging since the COVID-19 pandemic. The increased cost of doing business, securing supplies, and running businesses has led to problems in supply chain management.

55% of businesses in the manufacturing industry prioritise improving their supply chains. This has led to mass growth in the procurement and supply chain managementindustry, which is expected to enjoy an annual growth rate of 10.9% until 2032.

Improving your supply chain management should be a priority if you run a business. Properly streamlining your supply chain delivers many benefits. These can include enhancing your relationship with suppliers, reducing communication breakdowns, improving quality control, reducing overheads, and improving cash flow.

There are many benefits of supply chain management, and we have listed some of the most important benefits below so you can understand why SCM is an investment worth making.

The main benefits of supply chain management

Taking the time to improve and optimise your B2B supply chain management processes can result in many benefits. Just some of the benefits that you can enjoy include:

Work together with suppliers better than ever

One of the biggest benefits of supply chain management is improving how you interact with your suppliers. Not only will you have more cash flow, but you can also form better relationships with them. When you become more efficient and less liable to make mistakes, suppliers are more lenient when things like cash flow issues appear and credit is required.

Long-term relationships are vital for any business, and improved supply chain management will instantly improve your relationships with suppliers. This makes it easier to find the right ratio for things like markups on factory pricing, helping to find a happy medium with suppliers that creates long-term relationships. This results in more communication, understanding, and protection for both parties.

Reduce quality control oversights

Another important element of improving your supply chain management is the quality control factor. SCM improvements mean that defects and problems can be found quicker in the process. Creating positive relationships with partners and suppliers means that disputes over quality can be more open-ended and less aggressive.

This results in defects being spotted sooner and with less of a negative outcome.

Overcome problems with shipping

Another benefit of supply chain management is that you can separate the good from the bad regarding shipping. You might be using too many suppliers or too many shipping solutions. Improved management helps you to whittle down the number of suppliers and shipping options, replacing quantity with quality.

This helps you balance the rising cost of logistics, impacting businesses worldwide. Only through supply chain management, though, can you spot these bottlenecks and issues with quality.

Minimise overheads & inventory storage costs

Managing your inventory and overheads is one of the most significant costs in any business. By having a better handle on supply chain management, you can reduce the cost of things like storage and production by simply being more efficient. For example, you can carry less inventory as your data insights help you realise exactly the supply volume your business needs, with more orders on demand.

This means that you can reduce the size of facilities needed for storage and inventory management, cutting down on your overheads without losing business performance.

Reduce risks & catch problems earlier

The general rule is that if your business spots a problem in the supply chain early, it is cheaper to fix. However, when issues emerge closer to the end of the chain, they become expensive and often damaging to correct. Therefore, supply chain management helps you to reduce risk by spotting problems at the earliest possible junction.

This protects your business from taking on risky investments that might harm your financial standing and reputation. It can also prevent you from taking risks by dealing with suppliers and partners who might be based in locations that could incur sanctions on your business or working with partners who could promote a quantity-over-quality approach that later harms your business.

Consistently improved cashflow

Cash flow matters, and one of the main benefits of supply chain management is that you can solve your cash flow problems. By better forecasting how much stock you need and what materials you require, you can avoid over-ordering and thus wasting cash flow on resources you do not require.

Improved supply chain management will result in more accurate demand forecasting. This means you can spend your cash flow on what you know you need, not what you think.

Improved agility for new opportunities

Agility is vital in any modern business, and improved supply chain management allows for immediate flexibility. With the additional data and insight from supply chain management, you can spot opportunities to invest in software solutions that could improve your business.

Improved agility is one of the great benefits of supply chain management. It allows you to spot opportunities that might not have been noticed until later, meaning that you have the opportunity—and the cash flow—to make these investments to improve business scaling and growth in the long term.

Track goods & use data to take action

You could compare using supply chain management best practices to seeing everything in your business all at once. You know exactly what materials are arriving and what goods are going out the door, helping you to react when you need to either bring in more supply to meet demand or reduce supply.

You can also easily know your products’ locations during creation and shipping. The improved data helps you back up suspicions with real data, making it easier to push ahead with changes and improvements to how your business operates over time.

Reduce wastage & improve efficiency

An improved supply chain will make your business more efficient overall. You will have access to more data that can help you see where wastage is taking place and where cuts have to be made. This will help you improve your business’s efficiency without taking a needless gamble on results.

By stripping away as much waste and inefficiency as possible, your business can increase its productivity, resulting in greater profits over time.

Spend your cash flow wisely

The data associated with improved supply chain management will help you make better financial decisions. This includes investing in the right materials, partners, shipping companies, and vendors. By using the data associated with these improvements, purchasing and supply chain management go hand in hand.

Your business can reduce waste by investing in the right quantity and quality of supplies and materials. Over time, your improved supply chain management will result in picking the right partners, such as vendors and suppliers. This makes making more informed decisions on what to purchase and leave behind easier, making your business more cost-efficient.

Strengthen brand satisfaction & customer happiness

When your business is more efficient, you can improve everything from product quality to delivery times and prices. This encourages customers who have used your company to return and do business with you in the future. It also makes your brand more credible, improving your reputation and making it easier for customers to recommend you to others.

This will visibly impact your brand’s ability to grow and expand. It also creates a more consistent level of income, avoiding peaks and troughs caused by customer losses due to inefficiency. The better your supply chain management is, the easier it is to gain and retain customers.

Increase revenues & boost profits

The result of all of the above is that your business can become more profitable overall. You will have removed many bottlenecks and problems that have caused dips in performance and profits. Not only that, but your business will be more efficient, meaning higher profits. The improved efficiency means more businesses and clients will want to work with you, expanding your reach and revenue generation.

All the benefits of supply chain management listed above result in a more profitable, successful business.

Who benefits from effective supply chain management?

Improved supply chain management benefits every party involved in a business transaction. Businesses can reduce costs while boosting quality; suppliers can enjoy a more beneficial and profitable relationship in the long term, and customers enjoy a better overall end result with quicker deliveries, higher quality goods and services, and better rates.

In short, no business should go without investing in improving its strategic supply chain management. Improving the quality of your supply chain will result in a better business, greater profits, and easier day-to-day affairs.

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