Supply chain issues can cause significant problems for businesses. From ensuring you’re operating as efficiently as possible to always having enough product on hand, supply chain can impact so many business functions. Supply chain management is critical not only for success, but customer satisfaction too. An effective supply chain management can also increase your bottom line. To keep things running smoothly, you’ll need to pay attention to supply chain issues. And, when it comes time to raise funding, investors will be happy to see efficient and healthy supply chain management in place. Read on as we learn more about supply chain management and how it can impact your business.
What is supply chain management?
Supply chain management oversees all aspects of your supply chain. It ensures you have the inventory you need to fulfill orders and that customers receive their items as expected. It can also impact the price at which you’re able to deliver products. Unnecessary steps in your supply chain can drive costs up. Supply chain management involves all entities necessary to the process including manufacturers, suppliers, producers, customers, and end users.
How does supply chain management work?
Supply management involves three levels as follows.
#1. Strategic Planning:
Upper management typically oversees the strategic planning process. It involves deciding whether to expand into new markets, add items to inventory and so on. It may also include adding software to make the supply chain management more efficient and opening a new facility for supply chain purposes.
#2. Tactical Management:
Tactical management puts strategic planning into effect. It involves creating contracts and production schedules and setting up regulatory guidelines for logistic planning. It aims to control cost and minimize risks.
Operational planning determines how the day-to-day tasks involved in supply chain management are carried out. It involves overseeing production operations, managing inventory, and making decisions to ensure the company reaches its goals. It aims to boost cost benefit and efficiency.
The key elements of supply chain management include
- Demand management: This involves predicting future demand enabling executives to make decisions regarding external spending, purchase order management and waste management. Processes should be assessed on an ongoing basis to keep costs under control and see to it that raw materials are used efficiently.
- Communication collaboration: Effective communication is necessary in supply chain management. Vendors and suppliers must communicate with one another. There must also be good communication within companies. This will help ensure operations run smoothly.
- Business process integration: The aim of business process integration is to see various workers, departments, and functions as a cohesive entity. It encompasses various facets of the supply chain management process including relation management between customers and suppliers, product development, procurement, manufacturing flow management, inventory management, order management, distribution, and logistics.
Common supply chain management challenges and issues
Efficient supply chain management can greatly benefit a business. But, companies can face their share of challenges when implementing it. Here are some common supply chain issues that businesses may encounter.
- Globalization: It’s not uncommon for companies to seek out manufacturers and suppliers in other countries to reduce costs. However, this leads to challenges when it comes to manufacturing, storage, and logistics across borders. It can also significantly slow down the shipping process negatively impacting customer satisfaction.
- Competition: Competition is an issue for many businesses. It can be especially harmful to supply chain management as new companies may emerge with innovative technology that helps them run their supply chain more efficiently. Businesses can gain a competitive advantage by improving collaboration, focusing on goals and bigger issues, doing their best to manage costs, and making the right investments.
- Technology adoption: Businesses may be tempted to invest in new technology that they think will make supply chain management more efficient. But, investing in the wrong technology can be a considerable setback. Furthermore, adapting to new technology can slow company processes even if it is a step in the right direction.
- Security: Security is a common supply chain management challenge. There is a risk that companies may be hacked into as they increase their reliance on cloud-based technologies. Physical products can also be stolen. Companies can decrease risk by thoroughly vetting vendors, creating contracts with third party companies, and increasing their cybersecurity efforts.
- Regulatory compliance: There are a variety of regulatory requirements in place, and it can be challenging for businesses to meet compliance guidelines. These include national, state, and local guidelines, industry standards, trade agreements, contractual obligations, customer expectations and non-government organization expectations. Companies that take a multifaceted approach that includes setting standards, employee training, reporting, and testing will meet compliance regulations, so they maintain good relationships and don’t face legal issues.
Pros & cons of supply chain management
Supply chain management comes with its share of pros and cons as follows.
- Lowers costs: Supply chain management involves making processes more efficient and cutting back on costs whenever possible. Ideally this lowers expenses, thus contributing more to the bottom line.
- Improves customer satisfaction: The supply chain management process ensures customers receive quality products in a timely manner. This boosts customer satisfaction and retention.
- Gives a good handle on inventory: Inventory plays a key role in supply chain management. When companies are on top of their inventory, they are better able to fulfill orders and turn a profit. They can also protect themselves against shrinkage.
- Helps navigate disruptions: Healthcare crisis, climate events and other factors can cause disruptions to the supply chain. A smart supply chain management system will keep companies afloat despite disruptions.
- Enables growth: A smart supply chain management plan backed by the right technology and operational planning will help your company grow and rise above the competition.
- Businesses face challenges when trying to globalize: Businesses may source goods from out of the country to save money. Unfortunately, this also leads to increased shipping times and difficulties with storage and logistics.
- Competition: New businesses may come along who are adapted to new technology that helps them manage their supply chain more efficiently than companies using older technology. This can pose a threat to existing companies that are struggling to keep up.
- Security: Cybersecurity is an ongoing issue for people that are moving their technology to the cloud. Physical products can get stolen as well.
- Compliance issues: Staying compliant can be costly and confusing.
- Technology adoption: It can be difficult to find the technology that is best suited to your software management needs. Make a poor investment, and it could be a major setback.
Why supply chain management is important
Supply chain management is so important for so many reasons. From delivering a better customer experience to driving profits, supply chain management impacts internal and external operations. Some small businesses or startups may plan to refine their supply chain management as they grow, but this is truly a mistake. No matter how big or small your company is you should make a conscious effort to execute effective supply chain management at all times.
How Kickfurther can help
The ability to fund more inventory will call for efficient supply chain management. Companies often hit a point where they are growing, but struggling to keep up. By accessing funding for inventory you can keep your company growing without suffering financially.
Kickfurther is the world’s first online inventory funding platform that enables small businesses to access funds that they are unable to acquire through traditional sources. For companies that sell physical products or non-perishable consumables and have revenue between $150k to $15mm over the last 12 months, Kickfurther can help. We connect brands to a community of backers who help fund inventory on consignment and give brands flexibility to pay that back as they receive cash from sales.
Kickfurther can help startups and small businesses fund millions of dollars of inventory at costs up to 30% lower cost than the competition. With more than $100 million in inventory funded to date, Kickfurther can help you get funded within a day or even minutes to hours.
Supply chain management will help your businesses survive and thrive in a competitive marketplace. Earning business is about so much more than just having a great product. Create a company that’s easy to deal with, empathetic to customer needs, and always hungry to be the best. If you operate with these goals in mind, we’re sure it’ll just be a matter of time before you need inventory funding to keep up with sales.
Interested in getting funded at Kickfurther? Here are 3 easy steps to get started:
#1. Create a free business account
#2. Complete the online application
#3. Review a potential deal with one of our account reps & get funded in minutes