What benefits can companies enjoy thanks to enhanced SCM ?
Dan Myers Enhanced SCM brings many benefits to companies , including decreased cost , improved operational efficiency , better financial visibility and insights , enhancement of customer satisfaction and brand credibility , smarter purchasing decisions , reduction of total manufacturing costs , reduced inventory carrying costs and storage capacity , increased output , better cooperation , enhanced supply chain network and eliminated delays . These are theoretical advantages and tangible results that can transform a company ’ s operations and bottom line .
An adequate supply chain frees up time to focus on ensuring that a company is world class at its core activity . This will reduce costs , increase working capital and make the company more sustainable .
Brian Gerritsen At Travelers , we look at supply chain through a risk management and insurance perspective , and the reality is not everything is insurable . Some fragility in the supply chain is just going to be a business risk that you can ’ t insure .
We think of the supply chain in three tiers : the upstream portion of the supply chain , including your supplier network , everyone that ’ s providing you with raw materials or component parts or maybe subcontractors ; the second tier is what we call in-plant , which is from a manufacturing perspective , and that covers operations within your four walls ; and then of course the downstream – how do you get your goods to market ?
Ultimately , the goal is to remain competitive , productive , profitable and maintain those margins that either your board of directors or shareholders are expecting , even throughout unexpected circumstances .
I think having good visibility into your supply chain can really help a business understand the readiness of suppliers and provide some confidence that you ’ re going to receive goods when you need them . But part of that is having a network of trusted back-up suppliers . We saw during the pandemic that companies were relying on one or two raw material suppliers or component parts and , when there was disruption , they didn ’ t have back-ups and then there ’ s this ripple effect .
Understanding trade practices , laws , standards , currency fluctuations , cultural differences , the geopolitical area – even time zones – really gives you control relative to political and geographic constraints .
158 October 2024