Understanding How Supply Chain Management Can Increase Profits

For businesses to be profitable, they need to be able to effectively manage their supply chain. This management involves several departments within a company, including a company’s procurement team, the warehouse staff, upper-level management and even drivers moving product from the warehouse to the end user. To better understand the role of the supply chain in a business, it is important to understand the definition of a supply chain.

What Is a Supply Chain?

Simply put, a company’s supply chain is the system that is put into place to move products from your business to the consumer. It could involve everything from obtaining the raw material to producing the final product and getting it onto store shelves. For small businesses, their supply chain may entail moving their goods with a company owned truck. However, larger companies may contract out part of their supply chain, such as hiring a trucking company to move their products from a cargo ship to their warehouses.

Managing the Supply Chain

Being able to manage the supply chain for your business means helping to control the costs of your operations so you can move your products quickly and efficiently. If you lose too much money transporting products, you will not have a profitable business. In order to make it profitable, when costs rise for transportation or materials, costs have to be increased on the products to help the company make money.

To help manage the supply chain within your business, those responsible for its management need to know how to use tools that can help them. For instance, logistical tools can help choose transportation routes to optimise the delivery process or moving product from ship to the company’s warehouses. Technology can also be used to pool orders and coordinate efforts from different company locations.

Analysing the Chain

It is important that supply chain managers know how to analyse their information so they can eliminate waste. If there is redundancy in their procedures, they need to change the procedures to eliminate steps that don’t need to be taken. This can help to reduce costs for salaries as employees will not be taking any unnecessary steps, making them more efficient and reducing the need for overtime.

Analysing the supply chain can also help to change operations that are not working efficiently, such as warehouse management. The analysis can look at the current inventory management strategies to determine which stock is not moving or how to place it in the warehouse so it can be moved more efficiently and more quickly.

Some employees who work within the supply chain may benefit from supply chain management courses. They can review procedures, find out about more effective strategies and how to apply them and how to make more informed decisions about supply chain operations. Warehouse managers, upper-level management and procurement managers could benefit from taking courses to help them streamline their supply chain and make them work more efficiently. In turn, this will help them make their company more profitable.

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