Why is it important to analyze and manage supply chain processes?

Por: Benjamín Blas, Gerente de Proyectos Dux Partners & Co-founder de OpticksBI

The supply chain is an integral part of every business and, therefore, it is necessary to review its processes to evaluate performance in order to achieve organizational success.

Process management in the supply chain generates multiple positive impacts, among which are: customer satisfaction and loyalty, reduction of operational costs and improvement of the financial position of the business.

Let’s review these points in detail:

Customer satisfaction and loyalty

Customers expect to get their products in both time and form and the supply chain must be able to respond to these demands.

An example of this is Amazon, which, through a highly responsive network, manages to offer a wide variety of products with delivery according to the customer’s needs. A similar situation occurs in physical points of sale, where customers expect to find the right products and, to this end, it is necessary to have processes that enable replenishment or inventory management with a focus on service. For example, a customer who needs to have his vehicle repaired expects spare parts to be in stock so that he can have his vehicle back in stock as soon as possible.

Both cases represent opportunities for the supply chain to deliver excellent service to customers and thus increase their satisfaction and, with it, their loyalty.

Reduction of operating costs

The high cost that inventories can represent makes it necessary for replenishment processes to be effective so as not to generate overstock at points of sale and not to have bankruptcies.

Technology retailing must coexist with this reality, so the delivery of products such as tablets, computers or plasma screens must be fast to avoid high inventory costs in stores. A similar situation occurs in large mining operations in our country, where the focus is on keeping the operations “running”.

From the raw materials needed for blasting to the operation of equipment and machinery that allow processing the minerals, the costs incurred by stoppages are extremely high and the supply chain must be able to anticipate and plan resources to avoid such stoppages.

Financial position

The ability to deliver products quickly not only impacts customer satisfaction, but also reduces the billing cycle by transforming inventory into sales.

Increasingly shorter cycles allow for financial strength and stock rotation, avoiding negative impacts such as damage, shrinkage and obsolescence.

Another point to consider in the financial position is the definition of the network and warehouses. Visibility of customer requirements and how to meet that demand allows the generation of a lean network, with the necessary capacities, without incurring the additional costs of distribution centers or fleets with low productivity or underutilized.

These types of fixed assets represent high opportunity costs or the need for indebtedness; therefore, investors will always look for alternatives to maintain the financial health of the business.

Continuous review of supply chain processes, visibility of what is happening at each stage of the supply chain and the ability to manage in different situations are key elements in the success of organizations.

The supply chain is an integral part of the business and as such should be evaluated and managed as a key capability for companies.

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