In case of companies majority of companies pay attention to production, finance, marketing departments and so on but very few companies focus on supply management which is a very important system if the company wants to have edge over its competitors. Supply chain management in simple words refers to the management of the flow of goods in a systematic way right from raw material stage to the final stage that is until the product is delivered to the customer. In order to understand more about this concept, one should look at the advantages and disadvantages of supply chain management –
Advantages of Supply Chain Management
Cost Efficiency
The first and foremost advantage of supply chain management is that it helps the company in achieving cost efficiency because it can lower various costs like transportation costs, warehousing, packaging costs, reduces wastage by timely delivery of goods and so on which ultimately helps the company in achieving cost efficiency which in turn increases the profitability of the company.
Helpful in Identifying Problem Areas
In the absence of proper supply management company will find it hard to find problem areas as every department will blame other departments for failure but due to this management company can identify the problem areas in the company due to which company’s profitability and reputation are taking a hit. Hence, for example, suppose the production department is producing goods in time but due to the lackluster attitude of dispatch departments goods are not reaching on time to ultimate customers than supply chain management can easily identify the problem area which is the dispatch department and hence can take action against the concerned people.
Customer Delight
Since the primary task of this management is to make sure that goods reach customer on time it results in customer delight because nowadays people do not care about paying more money provided they get quality service from the company and supply chain management does exactly that resulting in costumer of the company getting satisfied and we all know that a satisfied customer will bring not only his or her business but acts as a marketing spokesperson of the company by bringing other customers to the company
Disadvantages of Supply Chain Management
Lack of Coordination between Various Departments
The biggest disadvantage of supply chain management is that it can work only if there is proper coordination between all the departments of the company and if departments are at loggerheads than this system will be a failure. Hence for example, if the marketing department does not inform the production department about the possible order than the production department will not be able to produce the desired order on time.
Complicated
Since it involves multiple departments sometimes it can be complicated and may hamper the normal working of the company besides workers as well as employees may feel insecure and demotivated because human beings by nature resist new things and to them the concept of supply chain management may appear very complicated resulting in them accepting this management half-heartedly.
Trained and Professional Staff
It requires professional and trained staff in order to properly execute supply chain management and in order to hire professional staff company will need to pay money which is an expensive proposition which is the reason why small companies seldom go for supply chain management as expenses of implementing this system outweighs its benefits.
As one can see from the above that supply chain management has advantages as well as disadvantages and that is the reason why any company thinking of adopting this management should carefully read above points and then decide whether to implement supply chain management into the company or not.