Good supply chain management (SCM) is the backbone of a successful business. Coordinating and optimizing the flow of products, materials, information and finances ensures that products are produced and delivered efficiently. Managing these processes effectively and quickly responding to supply chain management needs will help your business keep its competitive edge and avoid disruptions.
Understanding supply chain phases, models and logistics will give you the insight and strategy needed for operational excellence and business success.
What Is Supply Chain Management?
SCM is the centralized management of your business’s flow of goods and services. While you want to ensure production, distribution and shipment run efficiently, these processes are just three of five phases of SCM to consider:
- Planning: Planning starts with forecasting demands, planning inventory levels and designing the supply chain. The goal is to balance your supply with demand, ensuring all processes run cost-effectively and smoothly.
- Sourcing: Sourcing involves choosing the right suppliers for raw materials, negotiating contracts and managing these supplier relationships. The aim is to secure the best materials at competitive prices.
- Production: Production or manufacturing includes scheduling production activities, managing inventory, testing product quality and packaging products for shipment. This step relies on efficiency and quality control.
- Logistics: Logistics involves coordinating product delivery. It includes order management, warehousing and transportation, ultimately using the most adept, cost-effective resources to get products to customers on time.
- Returns management: The final step deals with potential exchanges and returns. Whether it is a product recall or an unsatisfied customer, returns offer valuable feedback and an opportunity to build customer trust.
The Importance of Supply Chain Management
SCM can vary between companies depending on business goals, strengths and constraints. Doing it right means your operation will enjoy better product quality, lower overheads and enhanced customer satisfaction. In fact, 79% of organizations with above-average revenue growth have high-performing supply chains.
Types of Supply Chain Models
Optimize your SCM efforts by adopting a supply chain model that meets your organization’s immediate needs:
- Continuous flow model: The constant flow model is a traditional method used in mature industries. It expects little variation in customer demand and relies on manufacturers repeatedly producing the same goods.
- Agile model: Organizations with custom-order products or unpredictable demand focus on flexibility. The agile model allows these companies to prepare for various fluctuation scenarios.
- Fast model: The fast model allows companies to capitalize on trends. It focuses on quick turnover for these products, which often have short life cycles.
- Flexible model: Companies with high seasonal demand use flexible SCM models to prepare for higher requirements during peak seasons.
- Efficient model: The efficient model is apt for companies in industries with tight profit margins. Aiming to use the most efficient processes and equipment available helps deliver the best products at the lowest possible production costs.
- Custom model: If none of the set SCM models suit your organization’s needs, use a custom model. Businesses in highly specialized or technical industries, such as the automotive sector, may use this model.
Challenges in Supply Chain Management
The economy greatly influences supply chains. Its ever-changing ways cause demand shifts, cost fluctuations and adjustments to production schedules. Additional challenges include:
- Demand forecasting: Market volatility can complicate demand forecasting. However, using advanced data analytics and staying up-to-date on market trends can help improve forecasting accuracy.
- Supplier relationships: Miscommunication and inconsistency can strain supplier relationships. Regular communication and collaboration are important to build solid and transparent relationships.
- Inventory management: Fluctuating demand can complicate inventory management. Using just-in-time inventory systems and real-time tracking technology with regular audits can help optimize inventory levels and reduce excess stock.
- Logistics optimization: Investing in a responsive logistics network that uses route optimization software and consolidating shipments helps cut costs and improve delivery times.
- Technology Integration: Continuously evaluating and upgrading technology is vital to keeping your supply chain agile and competitive. Technology can be complex, but it is essential to supply chain success.
Investing in Supply Chain Technology
Many key features of effective SCM can be linked to technology. Data from the Internet of Things (IoT) creates transparency and facilitates better stakeholder communication. Thanks to this transparency, organizations can identify potential weaknesses in their underlying processes — 71% of these companies use this information to revise their supply chain planning processes.
Protecting systems from cyber intrusions helps prevent disruptions, and AI can automate processes to lower the risk of manual errors. The data available from these technologies also offers these benefits:
- Data analysis as part of SCM helps with forecasting and meeting consumer demand.
- Comprehensive data allows you to optimize pricing for seasonal demand products to increase profit margins.
- Using analytical software helps you effectively allocate resources based on the sales forecast. It also allows manufacturers to confirm delivery dates when buyers place online orders.
- Data-driven decision-making will increase logistics efficiency and accuracy and increase savings.
How Logistics Can Impact Effective Supply Chain Management
Logistics is a key part of SCM, and running this process effectively directly impacts customer satisfaction. Poor logistics can cause bottlenecks, increase overheads and lead to customer dissatisfaction. Optimizing routes or using shipping methods like less-than-truckload (LTL) will help lower those overheads, reduce shipping times and manage inventory levels.
Logistics strategies that help with effective inventory management and cost efficiency include:
- LTL shipping: Small to medium businesses can partner with a logistics provider that lets goods from multiple companies share space on the same truck. Each organization only pays for the space they use.
- Transportation management software (TMS): At Broussard Logistics, we use robust data analytics to keep your freight information up to date. We also offer reporting options to suit your needs and a user-friendly dashboard so you can access your data anytime.
Good logistics ensures materials and products arrive at the right location, on time and in good condition, reducing costs, improving customer satisfaction and minimizing delays. LTL solutions, for example, can save you about 31% on shipping costs.
Trust Broussard Logistics to Optimize Your Logistics Chain Management
Good SCM is the key to your organization’s competitiveness and success. Running your SCM optimally helps your business respond to demand changes quickly, maintaining steady production to avoid shortages. Effective SCM streamlines your organization’s activities, maximizing your customer value, lowering waste and giving your company a competitive advantage.
Optimize the logistics side of your supply chain with Broussard Logistics. Since 1978, we have helped countless organizations manage and lower their freight expenses. Our powerful software, which conducts audits, performs analyses and helps optimize transport expenses, boosts your organization’s profitability. Automate your logistics processes, access your data when you need to and streamline your supply chain with Broussard Logistics.
Contact us today for more information on our logistics solutions or schedule your obligation-free analysis and start making informed decisions to support your supply chain.