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The Importance of Supply Chain Management (SCM) Aaj Enterprises August 24, 2022

Supply chain management in eCommerce comprises management of the supply chain operations to increase customer value and gain an edge over competitors. In simple words, supply chain operations management involves all the activities such as product manufacturing, packaging, shipping, eCommerce warehousing, delivery or transportation, retailing, return, and information systems and technology. With technological advancement, a massive potential has been unlocked in supply chain management, enabling supply chain operators to work seamlessly in real-time.

Operations and supply chain management is one of the vital components behind the success of any organization. Supply chain operations management should always be the priority of an organization, whether it’s a small, mid, or large-scale enterprise. An organized supply chain management can improve customer service, and the right material in the right quantity delivered at the right time can positively impact customers.

With the sudden boom in IT and e-commerce, customers expect live tracking, great customer service, and same-day delivery. So, an organized supply chain can provide these facilities to customers with a single click. In this article, we will read about the importance of supply chain management and the factors on which supply chain operations depend.

What is Supply Chain management?

Supply Chain Management (SCM) is the flow of goods & services and consists of the complete process of transforming raw material into the end product. It actively streamlines the supply-side business activities to gain a competitive advantage and maximize customer values in the marketplace. SCM consists of aspects such as logistics, IT, purchasing, etc. It consolidates raw materials, finance suppliers, retailers, manufacturers, wholesalers, and consumers into a seamless system.

What Is the Importance of Supply Chain Management for a Business?

There are numerous reasons why supply chain management is crucial for the business. Some of the most important reasons are as follows:-

  • Reduces Operating Costs

The supply chain managers always focus on minimizing the cost at each step in the supply chain. Some great ways to reduce costs include improvement in the production process, inventory management, and relationships with retailers and suppliers. Reducing the cost within the supply chain maximizes a firm’s profit, and brands can save millions of dollars by reducing costs incurred in supply chain operations.

  • Provides Agility

SCM allows companies to stay agile and efficiently handle unexpected variability or issues. By increasing visibility and streamlining the supply chain, organizations can diagnose critical issues and find quick solutions. Having backup plans can also help organizations find alternatives for unexpected issues without taking much time.

For example, if an organization has a goods transport service, they can provide the alternative if any of their vehicles breakdowns suddenly.

  • Improves Customer Service

Good SCM can improve customer service by ensuring that the right materials get delivered to the customer at the right time. A satisfied customer became the biggest fan of the brand. They might write their feedback, review, or comments on your website, GMB, or social media, which will increase brand awareness and endorse the massive credibility of the brand’s reputation. Apart from the above, it will also boost customer loyalty and retention.

  • Optimized and Integrated Supply Chain

Every organization requires four crucial elements to generate sufficient revenue, i.e. streamlined transportation system, operational planning, resilient supply chain, and agile finances. An integrated supply chain increases the collaboration with the end goal of decreasing the cost, response time, and production time. With an integrated supply chain, financial strategies, product innovation, and organization were better positioned to predict the demand and act according to it. Lastly, an interconnected supply chain provides flexibility to a business so that you can rapidly respond to the changes in customer demand and competitor actions.

  • Better Inventory Efficiency

Inventory forecasting is vital as it ensures adequate products to meet the customer’s demand, and you never oversell or sell out. Meeting customers’ demands is essential for attracting, engaging, converting, and resting the customers. Poor inventory forecasting might impact your business less, but it will chip away at your reputation, margins, and customer satisfaction.

  • Improved Financial Management

The price of insurance, and transactions, accounts for nearly 5% of the cost per unit price. Supply chain management can improve your profitability by reducing the costs of inventory, operational expenses, and many more.

What Is the Importance of Supply Chain Management for Customers?

Along with the organization, supply chain management is beneficial for customers also.

  • Lower Prices: SCM provides several benefits to the businesses, which leads to a magnificent reduction in the cost of the product, purchase cost, and supply cost.
  • Lesser Delay: Nowadays, one of the customers’ most critical needs is same-day delivery. Multiple e-commerce warehousing and good transportation can lead to conquering the delivery issues.
  • Better Customer Experience: Whenever any product is delayed or damaged, the first thing that strikes the customer’s mind is getting in touch with the customer care team. So, good customer service satisfies customers and increases brand value.
  • Improved Warehouse and Inventory Visibility: Nowadays, customers want to track their orders from dispatch to arrival at their doorstep. Hence, improving the inventory and warehouse visibility will not only build the trust of your organization but will also increase the chance of customer retention.

Wrapping Up

Here, we have read about operations and supply chain management. It is a system that streamlines everything, i.e., from product flow to unpredicted disaster. With effective supply chain management, businesses can eliminate disruptions and problems in the right manner. It is essential to move products efficiently and quickly from warehouse to destination. With efficient supply chain management, one can easily dominate over their competitors.

AAJ Enterprises is the one-stop solution for your problems if you are into the eCommerce industry. We provide services like e-commerce fulfillment, warehousing, operations and supply chain management, transportation, and return management. With a strong team of 500+ professionals, we have provided our clients with the most satisfactory services for the past ten years.

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