Why an effective supply chain is crucial to any business

    There are numerous factors, that combined, go to make for an efficient and successful business. The quality of the products and services being offered is the most important of these, but, if other supporting mechanisms are not firmly in place then even an amazing product will ultimately fail. With this in mind, here we explore why an effective supply chain is crucial to any business.

    The Statistics

    A survey conducted by Deloitte in 2014, concluded that almost 80% of businesses that had a high performing supply chain reported above-average growth in profits. The same survey revealed that just 8% of businesses with a poor supply chain were able to report above-average growth. The message? Supply chains are an integral part of the company and if treated as so will help the business to be a success.

    The Planning

    As with any other business component, a high performing supply chain starts with planning. A supply chain strategy, that is reviewed regularly is paramount and needs to factor in elements such as contingency plans, for example, what happens if my regular supplier is unable to deliver? The strategy also needs to look beyond products and materials and so should cover areas such as logistics. Building a good relationship with a reputable logistics service like TNT is a must if you are to ensure success for your business.   

    Monitoring Performance

    When working quickly and efficiently a company’s supply chain feeds into to the wider success of the business and can be measured accordingly. Growth is among the KPI’s that can be used to monitor this, but there are several other important indicators. One efficient way to monitor performance is to utilize an advanced POS system. Of course, they would still provide the cash register functions as most do, but you can also use it to your advantage for monitoring inventory; thus keeping your supply chain up to date at all times.

    Customer satisfaction surveys provide an excellent snapshot of how well the business is performing and highlight areas where improvements can be made. Questions that customers should be asked include those relating to:

    • POS and e-commerce
    • The quality of the product or service
    • Customer service quality and response times
    • Issues with out of stocks
    • Delivery lead times

    Evaluating Costs

    The way a business’s supply chain operates is a major factor in assessing its value, however, it is not the only thing to be considered, cost is also an issue. For example, companies that carry too much stock run the risk of stifling their cash flow and so an ongoing “cost to serve analysis” must play a part in streamlining and refining the supply chain process.

    These key factors will provide a firm foundation from which to build and maintain an effective supply chain and thus a successful business.


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