Supply Chain Management: 4 Factors Contributing to its Rise in the Corporate World
Thursday, February 15, 2018
“Leaders win through logistics. Vision; sure! Strategy; yes! But when you go to war, you need both toilet paper and bullets at the right place at the right time. In other words, you must win through superior logistics.”
— Tom Peters
Supply Chain Management (SCM) has been on a rapid rise for the past few years around the world. The scale of the industry is mammoth! In the US alone, every year, almost $1.5 trillion dollars are spent on transportation logistics, which is only a part of the entire supply chain process. Given the scale, it is not hard to see why corporations around the world are scampering and investing huge sums of money to streamline their supply chain processes. To give you another glimpse, almost 8% of the total US GDP is spent on logistics and its related elements. RFIDs, drones, automation, blockchains and the ‘internet of things’ are just a few examples of how no stone is being left unturned in the pursuit of dominating the competition with superior supply chain management processes.
According to Investopedia, supply chain encompasses the manufacturing, shipping and distribution of products but experts say it applies to all supply – side processes in an organization. We discuss some of the factors that have led to this concept becoming a world-wide hit with businesses.
1. It Streamlines an Otherwise Complicated Process
From procuring raw materials to assembly and then onwards to packing, storing, shipping and then distributing is only easy to say in one sentence in a blog post, however, the hassles and headaches throughout the process are enormous. There are a wide variety of factors that come into play like country policies in case of shipping or importing raw materials, production regulations and transportation concerns etc. SCM has bundled all these processes and determined effective models for handling the burden with ease.
2. Its Benefits Are Societal, Environmental and Cultural Too!
Apart from being cost and time efficient, boosting customer services etc, the benefits of SCM expand into other domains as well. These processes ensure that humans are provided with basic necessities like food, water and healthcare without interruptions. The disruption of the processes due to the 3 massive hurricanes in the US meant that the consequent losses amounted to almost $215 billion.
Being dealt as a separate field means that electric trucks and other green practices can be implemented into the industry easily.
3. With Rising E-Commerce, It Continues to Stay Relevant
With experts predicting online retail to phase out physical stores in the next decade, logistics alone continues to grow at 7% a year only in the US. This is because irrespective of whether they’re sold online or at brick and mortar stores, physical goods need to be transported. Moreover, it increases the role of SCM as with eCommerce goods are delivered to the customer rather than they coming to get it.
4. Availability of Companies That Specialize in SCM
Statistics show that 79% companies with effective supply chain management processes report revenue growths that are higher than average in their respective industries. The benefits are quite convincing but the greatest thing is that businesses that can’t afford to invest in SCM can outsource the process to professional services that are abundant throughout the US and the globe. There are companies that even specialize in certain parts of the process like transportation and storing, etc.
Supply chain management is taking huge strides of growth every year and a company neglecting it is certainly at a loss since the benefits range from cost saving, time effectiveness, building stronger consumer connections and protecting the environment, etc. Accompanied with the additional option of comfortably outsourcing the process, it is certainly walking into a pit with your eyes wide open if you still chose to forego it.
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