Why is supply chain management important?

FUNDAMENTAL ELEMENTS

• It meets the organizational objectives of timely availability of desired resources.
• Sets criteria to meet the assigned targets of resource availability.
• Opportunity to select reliable external providers inform of suppliers, vendors, contractor and outsourcing agents.
• Peace of mind.
• Smooth customer deliveries.

REDUCE OPERATING COSTS

• Decreases Purchasing Cost – Retailors depend on supply chains to quickly distribute costly products to avoid sitting on expensive inventories.
• Decrease Production Cost – Any delay in production can cost a company ten of thousands of dollars. This factor makes supply chain management ever more important. Reliable delivery of materials to assembly plants avoids any costly delays in manufacturing.
• Decrease Total Supply Chain Cost – Wholesale manufacturers and retailer suppliers depend on proficient supply chain management to design a network that meets customer service goals. This gives businesses a competitive edge in the marketplace.

Improve Financial Position

• Insert Profit Leverage – Businesses value supply chain managers because they help control and decrease supply chain expenditures.
• Decrease Fixed Assets – Supply chain managers decrease the use of large fixed assets such as plants, warehouses, and transportation vehicles, essentially diminishing cost.
• Increases Cash Flow – Firms appreciate the added value supply chain management contributes to the speed of product flows to customers.