Supply chain is integral to the success of a business. Most businesses fail because of lack of finances. A large chunk of finances, sometimes as large as 90% of the cost base, can be attributed to the supply chain, making it the most significant cost component. Thus, the financial health of a business is dependent on its supply chain.
Strategic management of supply chains and having a design process for supply chains are important aspects to take care of if the business has to be successful. It is important for a business to understand supply chain in-depth for strategic business management as it is the chief cost component of a business.
If the supply chain is well understood and managed, the purchase and production requirements of the business are effectively met. Supply chain management is the process through which the coordination and collaboration between a company’s suppliers, distributors, service providers and customers happen.
Some of the important benefits of a supply chain are:
Procurement:
Procuring raw materials, parts, supplies and services is one of the key benefits of supply chain management. Through supply chain management, companies are able to strike long term deals with suppliers instead of purchasing items on an ad hoc basis. This provides a two-prong benefit. One, the long term deals provide a cost-benefit. Two, making a long term deal with a reliable supplier frees the management to focus on other operational aspects while being confident of timely supplies. This is an especially critical requirement in case of limited stock components or raw materials.
Reduced costs:
As discussed above, supply chain management is helpful in reducing material costs. This is done by placing contracts with supply chain members. This removes the cost associated with finding material suppliers, negotiating deal terms and placing ad-hoc orders. Moreover, giving long term contracts to supply chain members usually gets a substantial discount to the company. Over and above this, the contract rate once fixed is fixed for a specified term and thus, saves the company from price fluctuations.
Also Read: Best High-Paying Jobs In Supply Chain Management
Quality control:
This is one of the major benefits of a supply chain. Companies have a standardized procedure for selecting suppliers for their purchase requirements. The quality standard requirements are clearly communicated to the supply chain and the quality is maintained among the different members of the supply chain. Thus, quality is maintained and quality control cost is mitigated.
Communication:
Supply chain members maintain constant communication. It is the task of the company to consistently communicate with all its suppliers in order to inform them of any latest quality, quantity or material change requirements. The demand schedule is available with the lead company and it is the responsibility of the company to update the vendors with the schedule in order to obtain the right quantity of materials at the right time.
Collaboration:
Another key benefit of a supply chain is the close working relationships between the company and the suppliers. This enables to reduce costs, enhance efficiency as well as improve innovation and design.
Business management professionals or students looking for a career in supply chain management could opt for an SCM certification online to enhance their career prospects.
Also Read: 7 Must-Have Skills to Become a Thriving Supply Chain Manager
Business environment is increasingly becoming multinational. Professionals like you deal with different business practices in your everyday jobs. The pace at which organizations are growing requires professionals, who are adept at operating across functions and are ready to take up responsible management roles. Thus, making it imperative for them to be skilled at managing complex, globalized businesses.
MBA is probably the first thought you had to prep your career in business management. But do you have the time to take off work and pursue an MBA exclusively? If the answer to that is no, then this read is for you.
MICA is known for its expertise in Management studies has designed a course that prepares professionals for any challenge in a business environment: without having to quit their jobs. A comprehensive course designed in consultation with the leading industry experts, MICA’s PG Certificate Program in Business Management will help you advance your business skills and boost the progression of your career.
This is a 1-year course which includes lectures by renowned MICA faculty and industry experts with insights from the real world. The classes will be delivered live and are scheduled to suit the convenience of working professionals. Over two semesters, you will learn about all major concepts in business management that include:
- Principles of Economics
- Communication Management
- Marketing Management
- Financial Management
- Business Environment and Policy (domestic & global)
- People Management (OB, OD, HR)
- Operations & Supply Chain Management
- Strategic Management
- Contemporary Issues in Management
- Project Management
Apart from helping you master these concepts, you also benefit in the following ways:
- Get certified by MICA
On successful completion of the program, participants are awarded a certificate of completion by MICA, Ahmedabad. - On-Campus module at MICA Ahmedabad
Students can interact with MICA faculty during the 3 day On-Campus module of the program. - Gain MICA Alumni status
Participants who successfully complete this program gain the status of MICA alumni. - Virtual Learning experience
Fully virtual course with LIVE online, instructor-led interactive lectures that provides a “real” classroom experience in a “virtual” environment
This course is an excellent opportunity for you to not just hone your management skills, but also to join the network of distinguished MICA alumni. Want to know more about PG Certificate Program in Business Management and understand how it can change your career? Talk to our career counsellors now.
Absolutely, no sugar coating now. Let’s face the truth. You cannot guarantee success when you embrace uncertainty and venture on your own. We strive and struggle in a competitive business environment, don’t we?
In such a competitive environment, when you and your team put your countless hours of effort, and pump in huge chunks of money, you cannot take a risk to a further extent by moving without a proper strategy. That’s a simple logic to explain the importance of strategic management.
Let’s dig deeper into the subject and try to gain a few insights on why it is extremely important in the current scenario.
What is Strategic Management?
Strategy and management are two words. A strategy can be defined as the initiatives the company undertakes to grow its business. It may include marketing strategy, financial planning, HR management and more. Whereas management is the process of running the day-to-day activities with reference to the future goals of the organization.
But what’s strategic management? Copying the definition, ‘strategic management is about driving the company’s growth through effective management techniques focused on goal-setting.’
It’s the ‘continuous planning, monitoring, analysis and assessment of all that is necessary for an organization to meet its goals and objectives.’
Also Read: 6 Key Supply Chain Skills You Need to Master as an Operations Manager
Know about Strategic Management
Strategy is never a solution to a problem that impacts your organization. Furthermore, it ensures a road map for your business to travel through and reach the destination called ‘goals.’
As Penelope Roeder, an expert in the domain explains it in one of her blogs, ‘strategy is not a fixed solution, mathematically computed or not. Instead, it is a set of dynamic guidelines that provide the context for a disciplined review of the many factors that affect any organization. It provides a context and process that allows the organization’s managers to make thoughtful decisions about immediate actions, long-term goals, and the terrain to be navigated between them.’
Why does it matter?
Let’s start to understand the importance of strategic management through a detailed explanation in an article in Forbes that was published a few years ago.
In ‘The World’s 10 Most Innovative Companies, And How They Do It’, the writer points out, ‘the best performing companies develop additional capabilities that are very specific to their chosen innovation strategies. Some companies are technology drivers: Their strategy is to develop leading-edge products. They need to be particularly good at understanding emerging technologies and also skilled at managing product life cycles. These capabilities, however, are less crucial for need seekers, whose strategy is to identify unmet customer needs and innovate to fill them. Need seekers, on the other hand, require world-class consumer-insight skills. The most successful companies, we found, are those that focus on a particular, specifically aligned set of common and distinct capabilities that enable them to better execute their chosen strategies.’
Pretty much explained! It’s absolutely a journey without any clear roadmap without a coherent business strategy for your business. And worse of all, you have no clue where you are heading to, without a clear objective and how to react to it. Is it worth any? Absolutely no!
As Small Business blog puts it, ‘Without a coherent strategy, your company does not have identifiable business objectives. Your company lacks the focus needed to achieve corporate goals and develop plans that will move the company forward. A lack of objectives means that your company does not have a specific set of tasks it is competent in and it has no vision for the future.’
What research shows us?
Evergreen Project is one of the most rigorously done management research studies to discover the secrets of business success. It examined a clear performance review of 200 management practices. There were 160 companies involved in the study.
One of the findings of the study was, ‘the results showed that the financially successful companies all had a clearly defined and well-articulated strategy. No exceptions. These companies outperformed the losing companies by a 945% to 62% margin in total return to shareholders, had a 415% to 83% advantage in sales, a 358% to 97% advantage in assets, a 326% to 22% advantage in operating income and a 5.45% to -8.52% advantage in return on invested capital.
Yes, as the market continues to evolve, and consumers become more cautious before they choose your brand, it’s never a wise decision to run a business without a clear-cut strategy. You cannot leave the process to conventional wisdom or gut instincts.
The takeaway
Our recent statistics show that there is a rise among professionals opting to grab a certificate in strategic management. And there’s good demand for a workforce with strategic management certification and skill set. Probably, individuals and organizations have a higher awareness of the importance of strategic management. It’s becoming a necessity now!
More Information:
Best Jobs in Supply Chain Management
How to become a Supply Chain Manager?
What is a functional strategy in business?
What Are the Functions of Strategic Management?
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