Supply chain management is becoming one of the most important activities for companies. Supply chain includes all the activities and organizations that are involved in moving a product from the supplier to the customer.
A recent study by IBM’s Institute for Business value found that supply chain management plays a very important role in ensuring customer satisfaction and improving operational efficiency. The same study found that organizations, that have outperformed their rivals, value supply chain management as a very important strategic activity. Majority of the executives interviewed as part of this study said that supply chains are very effective in enhancing customer satisfaction. A large percentage of the executives also said that supply chain is very effective in generating higher revenues.
The role of supply chain management has increased in significance also because of the multi-channel distribution that many businesses now pursue. Companies now sell their products through a number of different channels. It is through effective supply chain management that they are able to serve the different distribution channels.
Large Fast Moving Consumer Goods (FMCG) companies like Unilever sell a large number of products to a large number of customers. They are able to achieve this feat largely because of a very effective and efficient supply chain management that is both flexible and agile. A flexible supply chain enables businesses like wine retailers to respond to seasonal demand variations. Companies are also focusing on the supply chain to identify points of inefficiencies and eliminate them. Wal-Mart attributes its cost leadership in the retail industry to its superior and more efficient supply chain.
Increasing number of businesses are also focusing on the supply chain to cut down their greenhouse gas emissions. A sustainable supply chain is one that causes minimal impact to the environment. Sustainable supply chain management is high on the agenda of many large multi-national companies like Unilever and Wal-Mart. Most companies, who realize the value of supply chain management, are leveraging it for improving customer satisfaction and controlling operational costs.
Higher customer satisfaction usually results in higher revenues and lower operational costs result in higher profitability. No wonder then that many more businesses are investing in improving their supply chain infrastructure and training their employees in supply chain management. Supply chain is fast emerging as one of the most important sources of competitive advantage across all industries and sectors.