Importance of supply chain management

Supply chain management is a strategic approach for planning and obtaining organization’s current and future requirements through effectively managing the supply base to achieve organizational success. Considering that, logistics as part of the supply chain have a very important role in the supply chain process to achieve organizational success. The key responsibilities of logistics tasks are transporting products from place to place, storing products, distributing products to the end customer. Logistics is a segment of business in which optimizing the process of delivering goods from the supplier to the end user leads to significant savings in every company.

A company’s strategy is the set of actions that its managers take to outperform the company’s competitors and achieve superior profitability. The goal of a well-designed strategy is not only temporary competitive success and short-term profit but implies long-term success while securing the company's future. The supply chain management can be identified as a well-designed strategy, given that the supply chain plays a significant role in the success or failure of a company.

The most important goal of the supply chain is the delivery of products in the requested quantity, quality and within the promised deadline at the most competitive price during the entire process, from the supply stage to the final delivery. To really achieve this in such a way, the supply chain must contain the following characteristics:

  • A clear supply chain strategy as company foundation. This characteristic is based on a deep understanding of the company’s business strategy
  • To be adaptable and quick, which allows to compete in today’s dynamic environment
  • To be a transparent and have clearly stated performance expectations, and have a culture of accountability to customers
  • To be focused on continuous improvement throughout the supply chain and aim at peak-to-peak performance
  • To be conscious about strengths and weaknesses and participate in benchmarking activities.
  • To have an end-to-end perspective, focusing on the supply chain activities according to SCOR model of plan-source-make-deliver-return-enable
  • To have a global, rather than regional, focus

Without any hesitation, the secret of the success of the supply chain organization is a team of quality and dedicated change agents, that is, the supply chain loses, or wins based on the quality and innovation or creativity of the people who manage it.

To conclude its importance, we can say “Supply Chain is like nature, it is all around us.”

Below is a comparison between traditional and modern supply chain management.

ElementTraditional supply chainModern supply chain
Model approach• Plan and control
• Multiple unrelated planning cycles
• Plan, do, check, act
• Multiple interrelated planning cycles
Inventory• Increased inventory• Optimal inventory
Operations• Imbalance in supply vs. demand
• More reactive operations
• Balance in supply vs. demand
• Simplified operations
Total cost approach• Increased costs and resources• Decreased costs and resources
Collaboration• Non simultaneous communications
• Lack of collaboration
• Simultaneous communications
• Partnership
Supplier base• Increased variation between suppliers• Minimal variation between suppliers
Quality• Nonefficient response and on time delivery
• Impact on quality
• Efficient response and on time delivery
• Increased quality
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