Supply Chain Management: Understanding its Core Aspects
The nexus of growth, profits, success and opportunities for any organisation is based on how well its departments are connected, how different operations are performed and carried out, the various managerial aspects applied and the skill-set of cross functional teams. These subtle parameters define the overall outlook of business corporations and are a major contributing factor towards enabling more significant revenue generation, profits and ROIs.
Today, business owners have realised the importance of developing understandable, practical and feasible mechanisms that help firms stay on track for achieving their objectives and tick off the boxes in the process. Successful and profitable organisations today focus on creating end-to-end connections within their procedures, planning, and workflows that help better monitor, manage, and successfully negotiate supply chain challenges.
Those young and emerging managers looking to widen their horizons and shift towards e-commerce practices need to be well-aware of its basic concepts, elements, principles and have clear and precise knowledge over its theoretical and practical acumen. The supply chain online management program offered by an elite university across the country can help formulate successful and long-lasting careers.
Moreover, getting insights and required intel about the world of supply chain management should be the top priority for newcomers in this sector. Supply chains are just like embedded software with an interface for multi-layer connection wherein when a virus is detected, it can be analysed and rectified as soon as possible.
Supply Chain Management in 2022: Bringing all the Changes
The dynamics of supply chains run along the same lines where the interconnectivity of different activities such as procurement of raw materials, their utilisation, stock replenishment, warehousing, delivery and other processes need to be streamlined.
In the current day and age, the world of supply chain management is shifting towards more efficient and result-driven procedures of online practices. Given the numerous online B2B and BSC websites today that offer a plethora of options for choosing products, goods and services from different suppliers, the customers are getting closer with the businesses.
Due to the same reasons, supply chain managers are shifting their workflows from traditional means to more nuanced pathways of E-commerce-based services. There are vast opportunities for growth, success, meeting potential customers and other aspects online that aren’t possible with existing supply chains practices. Moreover, with regular consensus, tracking, metrics provided and inspection of different parts of chains, the overall quality of end-product, goods and services can improve massively and allow better absorption of potential clients.
In the modern digitally connected and data-backed environment wherein nearly everything can be figured out by configuring its past behaviours, data-sets that zero in on anomalies, classification of trends and other patterns helps corporations in developing robust strategies. Be it lead conversions, looking out for reliable suppliers, manufacturers or even accumulating the suitable raw materials, insights rendered by data-driven mechanisms can dramatically change the business topographies.
The IIM Lucknow supply chain management course is among the well-formulated programs available across the country that enables young and aspiring managers to grasp its latest developments and provide a 360-degree coverage of its technical and theoretical aspects. Understanding the subtleties of this domain can allow newcomers to apply those teaching concepts in their jobs roles, thereby leading to better outputs for their organisations.
The importance of E-commerce in supply chain setups boils down to establishing practical business dealings at all operational levels. Furthermore, supply chain managers need to make it their top priority to develop better connections amongst different hierarchies of supply chains and ensure that the changes, recommendations and other amendments are communicated clearly and understandably.
As per the E-commerce industry, wherein new businesses are popping up every day, it’s vital to introduce and adopt new and improved means for channelling success and return of revenues and profits. Merely making a great website and selling products online won’t cut it since the competitors grow on a daily basis.
Therefore, attention needs to be given to different aspects like product configuration, devising suitable infrastructure within the corporation, logistics management, secured payment gateway systems, procuring raw materials, and other aspects.
The primary objective of supply chain managers must be to develop efficient pathways that help in delivering end-products that meet customer’s expectations. Different fields need to be streamlined and augured according to supply chains, and proper methodologies for their utilisation need to be set up to achieve results.
The supply chain management industry jobs are on the rise as a new era of business awaits; those looking to earn high-paying job roles in these careers must have their basics covered. Enrolling on specialised programs such as the XLRI SCM course can help young managers navigate through the challenges, roadblocks and other hindrances in this field and surmount them for acquiring successful projects.
There are structured workflows for various procedures that help supply chain managers procure raw materials to make their delivery to end-users.
Processes that Govern Supply Chain Management
In layman terms, the dynamics of supply chain management refers to the process of converting raw materials gathered from a reliable source into finished goods by undergoing certain specific steps. Just like a diamond is first mined from iron ores and carefully polished, refined, and treated to be crafted into jewellery items, the same can be said about supply chain management.
The standard working principle of supply chain management revolves around cultivating a happy, healthy and prosperous relationship between clients and businesses. They work on the following ideology:-
Happy Customer = Happy Business = Higher Work Performance
As seen from the equation mentioned above, there lies an interconnection between customer relationships and the operational business, ultimately leading to higher and result-driven work performances.
There’s a statistic that supports the equation described above.
As per a report generated by Retail’s Big Show, it highlighted that if a customer is happy and content with the manner in how their return process is handled, they’re 71% likely to become a regular customer for that business and associate themselves with their branded products, goods and services.
The stat above showcases the need to establish a significant relationship between clients and corporations that leads to win-win situations for both customers and businesses.
Given the vastness of supply chain management and its involvement with several other departments, there needs to be a process for effective monitoring of different operations, workloads, looking after third party logistics managers, suppliers, manufacturers and other stakeholders and various other factors.
The brilliantly laid out supply chain management processes need to be aligned with corporate objectives, aspirations, and their established mission and vision statements.
Demand Management: Initiation of Supply Chain Management Process
The demand management process is a place where the magic and mysticism of supply chains begins. At this junction, the managers survey the present demand trends of their developed and deployed products, goods, and services for making future projections.
Forecasting and predictions in the demand management arena consist of three separate parts- demand planning, merchandise planning, and trade promotion planning. Furthermore, the main goal of demand management is to ensure that the goods can be delivered as per expected dates and there are no lapses.
When done effectively and in a planned manner, it can assist organisations in improving their accuracy of revenue forecasts, alignment of inventory levels with peaks and troughs as per demand graphs, and lead to better profitability of a particular product.
Demand management is a cumulative process that is concerned with the merchandise planning that combines sub-processes of planning, buying and selling the stuff produced by organisations to attract profitable prospects, maximising ROIs, and more significant revenues. Moreover, merchandise needs to be available at the places, times, prices, and quantities that the international market demands.
There is another entity of demand management referred to as trade promotion planning aimed at increasing the demands of products, goods, and services. They explicitly deal with retail stores for levelling up the demand rates by utilising techniques such as special pricing, display fixtures, live and computer-assisted demonstrations, value-added bonuses, no-obligation gifts, and other promotional offers.
Trade related promotion planning has several benefits, such as driving and achieving short-term consumer demands for goods deployed and sold in retail and other small-scale environments.
Supply Management: Balancing the Demand-Supply Process
Supply management is the second process of supply chains that focuses on making supply systems efficient and effective. The several constituent elements of supply management include- supply planning, production planning, inventory planning, capacity planning, and lastly, distribution planning, Together these different areas help in leveraging metrics that lead to better supply of popular products, goods and services.
The supply chain management online program teaches about its inherent features that lead to supply strategies for churning better profits, prospects and revenues. Supply planning is mainly concerned with the pathways that can help fulfil different requirements created as a part of the demand plan. The primary goal of supply management is to balance out the ergonomics of demand and supply silos for the achievement of objectives set out by corporations.
The different areas of supply management are massive contributors for creating enough supplies for end products, goods and services, out of which production planning plays a titular role in keeping a balance between demand and supply trends for firms. Production planning dynamics address and develop efforts that look after production, manufacturing, and deployment of correct technologies that lead to positive outcomes.
Production planning considers the resource allocation of employees, delegation of tasks as per workers capacity, procurement of raw materials and building successful production capacities.
Inventory planning focuses on determining the optimal quantity, quality, and timing of other procedures required to align with companies’ sales and production needs. On the other hand, capacity planning describes the staff associated with production and the equipment available for meeting the demands of goods, products, and other services marketed by firms.
Sales and Operation Planning Process: Getting Things Done
Under the second supply chain management process, the sales and operation planning phase is critical for carrying forward the work done in the last stages of demand and supply planning and forecasting. Sales and operations are interlinked together since they impact the outcome of strategies at the operational level and bring in increased sales of products, goods and services marketed by a company.
Modern businesses focus on developing cohesive policies, plans and strategies that involve different fields for getting things done and meeting strict deadlines. Sales and operation planning, known as (S&OP) process of supply chain management, is a monthly integrated business managerial that aims at driving leadership strategies for developing effective supply chain management throughout the corporation’s infrastructure. They explicitly focus on including sales, marketing, demand management, production, and inventory management while launching new and upcoming products.
The utilisation of sales and operation planning niches helps businesses in getting a bird’s eye view over several departments such as digital marketing, operational business dealing and existing hierarchies amongst the organisational junctures. Moreover, it deals closely with fostering impactful financial and business decisions that are displayed in well-connected plans and strategies across the business domains.
Sales and operation planning is a continuous, ongoing and monthly updated process that forms the basis of some of the best, practical and result-oriented strategies and plans. The interlayered process creates a dynamic environment that emulsifies the usage of resources required by customers and for developing good policies that bring in more ROIs, better the corporation’s bylines and other monetary aspects.
The connection between marketing and sales allows managers to oversee the inherent areas that need attention and highlight those through their integrated policies.
Product Portfolio Management: The Documentation Process for End-Products
The product portfolio management is the fourth process in supply chain organisational settings that presents a practical plan for launching a new product, good or service developed by a particular organisation. It’s the phase wherein theoretical models developed in the last processes are brought together for creating practical planning and deploying those strategies in the market.
Product portfolio management acts as a guideline for taking an idea, thought, and other theoretical processing into practical procedures for its introduction in market settings. Furthermore, product portfolio management takes into consideration the exhaustibility of products, goods and services. It’s a safety net that acts as an exit strategy in case the launched product doesn’t meet the client’s expectations and fails at the international level.
As the name suggests, the product portfolio management is designed to manage different aspects associated with it as per the goods launched. Managers involved in looking after these factors need to articulate the performance carefully, identifying risks and hazards involved with products, seeking and capitalising opportunities, prioritising high and low-value products, optimising resource allocation across various domains and balancing product’s profitability as per market changes.
It’s usually done to meet and align product portfolio documentation and to model with business strategies to meet the corporations’ target revenues, operational goals, and profitability metrics. This process can be incorporated extensively across the enterprise processes and takes the help of an automated solution to figure out anomalies, total transparency, potential roadblocks, and resource allocation in different scenarios.
Leveraging data based and automated solutions helps in generating insights about pipeline bottlenecks, robust analysis of business procedures and dashboard capabilities that cover the entire scope of supply chain networks.
Challenges Associated with Processes Driving Successful Supply Chain Management
The plethora of processes defined above is instrumental in setting up successful and appropriate supply chain management measures that help in increasing their bylines, attract better projects and gain an edge over competitors in international market standings. These processes reflect the need for shifting existing procedures into real-time and data-fuelled supply chains that can manage, monitor and evaluate accurate practices.
With the widespread connectivity between networks, departments and other sectors, supply chains can be impacted by heaps of different aspects. More often than not, supply chains rely on past historical data for developing their policies, strategies and other action plans. Hence, it sometimes becomes humanly impossible to manage these areas by a single manager or a team of managers.
However, when changes crop up in these environments due to climatic anomalies, the introduction of new laws, or other means, companies find themselves with too much to handle while being submerged with deadlines. It’s amongst the variety of aspects that can arise due to the traditional deployment of supply chains and their implementation.
Moreover, another technique that most organisations fail to capitalise on is the unification of supply chain planning with enterprise planning metrics. Companies can benefit immensely by synchronising their short-term operational planning with the broader business planning process that helps make real-time updates to inventory updates, forecasts, and overseeing the demand-supply networks.
Therefore, deploying real-time sales and operation planning processes can lead to better and more efficient results that allow key stakeholders, business associates, and others to create new scenarios. Moreover, it assists managers to quickly navigate and assess solutions for utilising their resources to optimise profitability in case an unforeseen event occurs.
Also, for companies involved directly in delivering consumer-faceted goods and services, it’s vital that they utilise software that leads to better interaction with end-users. Open communication and leveraging end-to-end visibility across the supply chain network and communicating with wholesalers, manufacturers, retailers, and others can allow in sensing demand signals from customers.
Data can play a huge positive role on different facets of supply chains and lead to better management and connectivity of processes. The IIM Lucknow supply chain management course has been devised to provide the knowledge of data-fuelled methodologies that can help businesses maintain steady growth and economic practices. Since supply chain management involves a myriad of manufacturers, suppliers, channels, customers, and pricing schemes, its models can be revamped by incorporating real time mechanisms.
The nature of supply chains should be flexible in nature to traverse and adjust to different changes that come up in their structure. Technology proves to be a tremendous asset for supply chains in facilitating efficient planning, quick reactions, successfully dealing with disruptions and other factors.
With E-commerce taking centre stage post the digital transformation processing, there’s more than ever a need to adopt technical solutions in supply chains and deal with its issues, challenges, and other fallacies.
How does Supply Chain Management work in E-Commerce Firms?
The amalgamation of supply chain management in the field of E-commerce has been a successful one, leading to better business efficiency, more excellent outputs and better targeting of customers. The inception of supply chain management practices in e-commerce settings allows in gathering business and operational insights about the website’s features; the leads generated, intel regarding payments, invoices, the delivery of items and whether there have been any returns and also information about orders placed can be collected in real-time.
E-commerce has taken the world over today; since the time people have been asked to sit and work from homes, purchasing online has become mainstream. Today more and more customers are buying things online, and as a result, there has been a rise in online shopping patterns; with a variety of options to choose from and different brands at a glance, E-commerce is the future of shopping.
Supply chain management in E-commerce environments focuses on procuring and assimilating raw materials, manufacturing products, and distributing and delivering end products, goods, and services as expected. Moreover, the dynamics of supply chain management in E-commerce scenarios rely on managing and balancing the supply and demand of products preferred by consumers, inventory tracking, developing entries for orders, management and procurement, warehousing, and delivery.
There are different supply chain management processes that are critical for the success of E-commerce websites. These have been instrumental in bringing humans and businesses closer together for conducting business. Today, products are no longer sitting on shelves or cupboards of stores. Instead, they’re being held in warehouses all over the country. With the increase in business and growth of customers, large retailers have resources that help in making their products available at different warehousing facilities across locations.
However, there lies a catch,
As per a report generated by Australian and New Zealand company Logistics Bureau, nearly 79% of high-performing supply chain management companies receive below average turnovers every year.
The glaring stat above highlights that despite incorporating practical and workable supply chain metrics, several leading companies fall behind in terms of earning profits, achieving good revenue turnovers and other economic success.
The reasons for the same can be traced back to the application of supply chains in E-commerce settings. Therefore, there are several challenges that executive teams need to overcome and negotiate with prior to moving on with supply chains in online shopping topographies.
Some Common Supply Chain Management Issues in Ecommerce Firms
The parallel train lines in regards to supplying chain management and E-commerce must work together and help each other out for taking the business to newer heights. However, with the rapid changes taking place every day in technological, structural and law enforcement aspects, it becomes difficult to keep an eye over both these sectors. Hence, specific challenges lead to the downturn and, if not managed successfully at the nascent stages, can result in significant drawbacks.
These challenges arise due to different reasons and, as such, need to be dealt with at the earliest. The nature of supply chains is built in such a way that everything- process, procedures, different stages of product journey from a raw material to a commercial entity is made in a structured and well-connected manner. Therefore, when there are any issues/problems faced in one aspect it can quickly spread across the entire network of supply chains.
Modern supply chains need to constantly evolve and introduce practical pathways that lead to absolute absolvement of issues and problems managers operating in E-commerce firms face.
The following sections shed light on different supply chain management problems that constitute E-commerce setups today:-
Issue 1: Inadequate Supply Chain Management Infrastructure
As young and aspiring managers will learn through the XLRI SCM course, this managerial field is diverse, spaced out and vast in nature and has several intertwined processes. Therefore, there needs to be adequate infrastructure installation in place that helps in surveying different supply chain management practices in E-commerce environments for long-term success.
The three primary features of any scalable warehouse includes- visibility, mobility, and flexibility that determine how customers interact and communicate with a particular organisation’s end-products. In the world of e-commerce, there exist smaller order sizes with greater frequency and volume of orders, deliveries and other aspects. This calls for a revamp in the organisational layout that utilises space effectively and efficiently.
It becomes a more significant challenge for companies that are conducting business with multi-disciplinary sales fulfilment of their marketed goods from a solitary physical facility. With a sporadic increase in single-order deliveries, organisations need to focus on leveraging the Warehouse Management System (WMS), a database for keeping a record of product itineraries. This intelligent software works on automated tools and mobile smartphones.
The application of remorse devices helps managers and E-commerce staff personnel to streamline warehouse spacing and allotment of tasks to their subordinates. The by-product of such nuanced techniques helps in delivering orders as per the delivery dates without fail.
These infrastructural incompetencies are critical factors that make or break E-commerce businesses and can prove to be a significant hindrance in facilitating success and growth. As highlighted earlier, the pillars of infrastructural in warehousing settings are constituted by visibility, mobility, and flexibility. In order to usher towards successful prospects in this domain, managers need to ensure that these three drivers are headed in the same direction for garnering success.
Issue 2: Inaccurate Inventory Levels
There has been a change of demands in the world of inventory management. With the global rise of customer demands for purchasing products, there need to be suitable stock keeping units for particular goods, services and products offered by corporations. Moreover, there can be issues associated with high-value electronic items and maintaining a lower buffer stock in case there’s urgent delivery or on rare occasions wherein there’s less time for stock replenishment.
Furthermore, problems arise when a distributor or supplier does not have enough stock in their inventory. It can work wonders for supply chain managers if they can get a prior understanding of the exact status of the stock, net stock available and other metrics. It can help businesses in losing out on profitable customers and avoid incurring losses.
The ever-changing trends of clothes, fashion, sports items and other facets create a tricky situation since today’s best seller can very well become tomorrow’s special offer. In such situations, stock replenishment acts as a real trail for unexpected policies that can lead to little or no turnover predictability.
Irrespective of the nature of business and clients, a greater number of stock keeping units means driven and precision-oriented inventory tracking. Therefore, the crux of inventory management lies in managing high-ended products offered by big and leading companies that can hit budgets hard in case stocks aren’t looked after properly.
Apart from this, stock replenishment is also an area that businesses supplying E-commerce solutions struggle with for forecasting the amount of items required. With the developments in technology, there are plenty of different tools and software that help with better predictions regarding managing stock and ensuring that enough items are available in case of shortage.
Issue 3: Not Investing in Proper Transportation and Logistics
It’s a no-brainer that once stocks are ready and products need to be supplied for deliveries and sent across different locations, they need to be done so in a punctual manner. However, given the lack of inexperience in E-commerce and the rising cost of technological tools are forcing many small-scale companies to outsource their fulfilment to third-party service providers (3PLs).
Carefully synthesised and specialised third-party logistics often show expertise in material handling and its equipment, knowledge of several systems and can zero in on issues that go unnoticed by organisations. Each of the third-party logistics providers showcases its own unique strengths in the delivery of products and other distribution locations such as hubs or warehouses.
However, given the benefits of outsourcing transportation and logistics, there lies a major dilemma in whether there needs to be one or more dedicated third-party logistics?
The question above proves to be challenging with companies that are running low on funds and don’t have decent turnovers. Moreover, given the numerous risks involved, such as the variety of delivery vendors can mean an increase in costs and other arrears due to more idle time. Still, on the flip side, it ensures there’s a backup service available if the opted ones didn’t go as planned.
But the benefits are immense, the significant ones being retailers that master the art of logistics and find out their cream of suppliers can better their bottom lines and bring in more revenues for companies looking to widen their E-commerce business.
When both the supply chain management and businesses lack experience in working with E-commerce practices, mistakes in terms of pointing out the correct logistics that run smoothly can be a major challenge. In such a case, it’s advisable to look for a retailer, wholesaler or supplier that knows the E-commerce market well and ensures reliable product delivery.
Issue 4: Increased Costs of the Supply Chains
In the current environment where economies are slowing down, and prices are slashing, it becomes hard to get good profit margins across the different supply chain networks—the inherent costs, arrears and other budgets that form a given supply chain environment. Furthermore, a lack of visibility and accountability for the reduction of prices can lead to hazards and other implications for E-commerce companies.
The major contributors of increased costs include- the rising price of fuel and petroleum for transportation of goods by sea, road and other means. Increase in commodity prices that maximise prices of raw materials. Higher labour costs from suppliers, manufacturers, producers and other associates. Apart from these, the complexity of supply chains in terms of logistics and inventory leads to higher charges and overhead costs for storage, transferring of goods and overall management of products.
How to Resolve supply chain Issues?
As seen from the paragraphs mentioned above, problems in supply chains in E-commerce settings are paramount, and these must be resolved at the earliest to avoid any hazards and financial risks. One of the best ways to deal with challenges and issues provided by E-commerce settings and the application of supply chain management is to start looking at problems from the customer’s perspective.
Meeting customer’s expectations and delivering items as per the delivery dates is a vital factor that can help in attracting a broad consumer base. Certain companies such as Amazon and Zappos are setting new benchmarks while delivering their products to their clients.
One of the other factors is to develop less complex supply chains by leveraging appropriate tools and software that help in performing tasks with precision and finesse.
Lastly, investing in risk management can prove to be beneficial for organisations. In order to deal with unforeseen changes in supply chains and their interactions with E-commerce practices. Hiring a logistics software development firm on board can help with the successful dealing of issues and lead to better outputs for companies.
A sound and amicable relationship with partners, 3PLs and suppliers can help in rendering high quality products to customers. This also creates a room of improvement in supply chain operational mechanisms and helps in streamlining workplace structures.
Successful Negotiations with Supply Chain Issues = Success in E-Commerce Business
The article above speaks volumes about how the integration between supply chains and E-commerce business can lead to better prospects for both managers and customers. The complete revamp and revolution of technological advances can help in creating and delivering products online that bring in more revenues, profits and returns for businesses.
Currently, the speed at which improvements and developments are taking place, it’s vital to apply these tools and software in the supply chain management surroundings to facilitate the success and growth of firms. The glaring issues described above in the article above are often the root cause for business meeting failures and being unable to deliver online products to end-users on time.
Therefore, there should be plans in place that lead to better negotiation and absolvement of issues. It’s always best to resolve problems at the grass-root level and avoid further complications. Having adequate planning and structure in place helps in giving clarity over different supply chain operations, procedures and activities that help in maximising outputs, revenues and better ROIs for companies.
Success in E-commerce with the correct application of supply chain management tools and technologies can assist companies to attain a good position in international markets and beat the competitors.
Young and emerging managers need to have correct practical and theoretical knowledge for moving further in their careers. The jobs in supply chain management have been on the rise, and enrolling for programs like XLRI SCM course can help new executives accitimialse to the corporate environments.
More Information:
5 Functions of Supply Chain Management
What is the Main Goal of Supply Chain Management?
How Analytics Play a Key Role in Supply Chain Management?
What are the Essentials of an Optimised Supply Chain in 2022?
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