5 Reasons Why the Success of a Business Is Dependent on Supply Chain
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5 Reasons Why the Success of a Business Is Dependent on Supply Chain

  • General News
  • 9th May 2019

Whether you are a founder of a startup or the CEO of a fledgeling organisation, the success of your business depends intricately on the performance of your supply chain. If you want to take your business to the next level, then you need to have a successful supply chain. The company that can’t manage the procurement of raw materials through to the final delivery of their goods to the point of sale and distribution centres will never reach the top of the business world. The process of supply chain management is not only meant to reduce the size of the budget to improve efficiency within the organisation but, it should also deal with the strategic alignment of end-to-end business processes to give the organisation a competitive edge over others.

In the digital world that we live in today, the demand for supply chain management has increased like never before. It has become an integral part of the business as it has the power to reduce operating costs, improve the financial position of a company, boost customer service, and add many other values to an organisation. With this in mind let’s understand why supply chain matters the most to modern businesses.

1. Improves the Financial Position of the Organization

Every business works with the motive to earn as much as profit as possible and improve its financial position. With effective supply chain management, you can keep the expenditures in check and even decrease them to some extent. The supply chain can also help you reduce the use of fixed assets, such as warehouses, plants, and vehicles. Not only this, but the flow of cash in a company increases when it has proper supply chain management.

2. Decreases the Cost of Purchasing & Production

The importance of the supply chain in an organisation is not only limited to boosting customer satisfaction or improving the financial position. It also plays an imperative part in decreasing the purchasing and production cost of the business. It is because of the proper supply chain management that retailers don’t have to hold the costly inventories in their stores once their supplier has provided them. Similarly, manufacturers can avoid material shortages when they are operating within a properly designed supply chain.

3. Helps You Work in Collaboration with the Suppliers

Your suppliers have a great part to play in the success of your companies supply chain. Issues that arise within the collaboration between your business and your chosen suppliers can lead to uncertainty in the supply chain. This can impact on the overall success of your business. It can also increase expenditures and impact customer service levels. To avoid any potential pitfalls, it is essential that you work in collaboration with your suppliers as it is the only way to protect against supply bottlenecks and minimise costly inventory shortages.

4. Ensures Customer Satisfaction & Boosts Customer Service

The success of a business is dependent on customer satisfaction. If you can give your customers exactly what they need, then you are likely to have a longstanding successful business. Your supply chain has a large role to play in boosting your customer service levels. The expectations of the customers regarding the correct product assortment & quality and its availability & delivery at the right location can only be achieved if the business has effective supply chain management. Customers also expect that quick and effective support is available immediately after they have bought a product, and that is only possible when the supply chain is highly functional.

5. Increases the Revenue of the Business

If you have a well-designed supply chain, then you can increase the number of clients you have and build a strong customer base. It also helps in increasing the average transaction size and frequency of transactions per customer. When you can attract more customers and sell your products to them, then you will, in turn, increase the revenue of your business. So, if you want your business to bring in more money, then you need to have proper supply chain management.

The Bottom Line…
If you want your organisation not just to survive but to thrive long into the future, then your supply chain should be a primary focus. If you believe that the supply chain of your business is not properly designed, then you need to begin working to make it more effective as soon as possible.

 

Author’s Bio
Adam Jackson is an Australian-based academic writer who is currently working with Assignment Prime. He holds extensive experience in the field of management and has helped hundreds of students complete their assignments writing tasks on various complicated topics of this subject. He also runs his own blog where he writes about the latest developments in the business world. When he is not writing, he is busy playing with his furry friend.

 

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