Supply chain management refers to the production and distribution process of a product, including everything from the procurement of raw materials to the delivery of goods to consumers. This management plays a major role in enhancing competitive advantage, customer satisfaction and cost control.
7 Key Principles in Supply Chain Management
Here are the seven key principles that help manage the supply chain efficiently.
1. Customer segmentation based on demand
Customer segmentation based on demand is important because customers have different budgets and needs. Businesses need to research customer needs, calculate costs by analyzing profits margins and develop specialized services for each segment. Supply chain management can then be applied to manage each segment effectively.
2. Personalize the logistics network
Customizing the logistics network helps meet the requirements of the service and the profit target. By personalizing the logistics network effectively, you can make the process more efficient.
3. Listen to the market signs to make appropriate plans
The manufacturer needs to listen, observe, analyze and make effective forecasts to achieve management efficiency. The forecasts need to be made by keeping the needs of customers in mind and making appropriate adjustments to minimize overstocking as well as the shortage of goods.
4. Ability to react to the market signs
The manufacturer needs to have an improved ability to react to the market signs. It can be achieved by constantly improving and innovating the products according to the needs of the customer. In case there are delays in production or distribution, the supply chain may retain inventories.
5. Finding and managing effective supplies to reduce the total cost of ingredients and services.
Finding good suppliers and efficiently managing the supplies helps in minimizing costs of raw materials, finished products and overall services. This helps in increasing profits by increasing the sale price of finished products.
6. Developing the application of technology across the entire supply chain
The application of technology in supply chain management enables the managers to get a panoramic view of supply chains, product information, cargo flow and more. It helps in making appropriate adjustments and decisions to improve the efficiency of the management. The supply chain management software offers features that help with planning material, managing contracts, managing prices and payments and many other business operations. This software streamlines the entire process and can easily manage complex operations with transparency.
7. Building and applying effective measurement systems across multiple channels
Applying effective evaluation systems helps review and improve the efficiency of supply chain governance. This evaluation can be done based on multiple important factors.
Proper use of the 7 key principles in Supply Chain Management can help businesses to manage their supplies more efficiently, provide a better customer experience and reduce costs in production and delivery.