Improved Supply Chain Management Benefits

Improved Supply Chain way BenefitsImproved supply arrange management has the following benefitsReduced blood line holding.The implementation of effective supply chain a companion depose reduce the number of stocks it is takeing and at the same m improving the node service. cut stocks on hand imparting avoid incur holding cost which is the cost the smart set pays for storing stocks. It includes w atomic number 18housing and labour to keep up the stocks. Good communication between the familiarity and its suppliers, knowing the minimum stocks implore before re mark, proper estimation of demand, and fellow feeling the mode of imparting go forth help to determine the correct volume of stocks the conjunction needs in a given period will help it to eliminate special caudex. Managing the education and communicating and sharing it effectively to suppliers and customers will conduct to truth of the take of stocks needed at a certain period. The armory level essentia l be enough to view the demands of the customers and with the minimum cost to be incurred. The supply and the demand for a return mustiness be balanced. Reducing the stocks avoid tying the companys capital on unneeded stocks.Elimination of waste.Waste in form of spoilages, defects, theft and obsolescence mess be minimized and possibly eliminated done having the unspoiled inventory level to keep on a particular period. Overstocking or overproduction will result to wastes and losses for the company. Customers ar only after receiving the full quantity and wide-cut choice at the right time. Activities such as unnecessary execution of goods within the store, and wargonhousing which does not add value to customers should be eliminated. capital punishment of an effective supply chain will make this possible. Proper coordination with suppliers and understanding logistics ar the keys to deliver customer service and demand at the right place, quantity and time.Improved customer service. in effect(p) supply chain will increase efficiency within a company. Efficient company can deliver outdo services to customers. It important to recognise what the customers touchablely destiny and that is what the company will deliver. Only those value adding activities are practices within the company. nurture adding activities are those handlees within the company that will add satisfaction to customers. Products should be delivered to customers on time and in accordance to their specifications. The customers demand should not bonnie be met but should also be exceeded.Reduced Labour Costs.Effective supply chain will reduce labour costs. Because the processes in the company is well planned and defined, duties and personnel are not redundant. Unnecessary functions are eliminated therefore resulting to reduced labour costs. One example is that when a company is maintaining only the right volume of inventory, it will not be needing to a greater extent people to do the stocking, operating forklift, people who will secure the warehouse and supervisor.Improved Manufacturing Planning.The raw worldlys required, the timing of deliveries and other activities and resources related to be after a manufacturing of product must all be considered in order to gain a product with the least costs but with good quality that at the end would satisfy customers. In planning the resources, the company should be ready for contingencies and should address the question what-if. Through careful planning, manufacturing a product can be carried on without any reservation because all the possibilities were considered. retributive In Time.Just in time is an inventory strategy wherein goods are only received only when needed in production process1. Through this strategy, wastes and carrying costs are minimized because a company is just now holding right amount of stocks that will make it able to meet the demands of the customers. This strategy will be effective if the com pany has strong kinship with suppliers. These suppliers are willing to deliver more frequently and on time to meet customers demand.Methods to overcome barriers in an organisation when implementing a supply chain improvement strategyInappropriate dispersal networks.Distribution network as defined is interrelated arrangement of people, storage facilities and transportation systems that moves goods and services from producers to consumers2. The scattering network should be reliable and fast customers unavoidableness to take a shit their products when they want it. Inappropriate distribution networks will hinder the proper and fast motility of products from manufacture to customer that is why there should be proper planning on who and what should be included in the distribution network.Ineffective distribution strategies.Distribution strategy is the plan how a manufacturing company will delegate products to intermediaries such as wholesalers to retailers until it reach the end u ser3. The strategy must we well thought and should use distribution networks that are reliable so that the products will reach customers at the right time.Trade-offs in logistical activity.Trade-offs in logistics may happen for example when deciding to confuse fewer depots, punishing stocks requirements or using less protective transport packaging in exchange for some advantages such as reducing costs or no need to have rotund storage facilities. The impact of these tradeoff should be considered because this might cause loss in sales overdue to wrong order picking and other instances related to trade-offs.Reduction of transportation costs.Transportation is one of the costly expenses in supply chain. It is important to have the best quality transport that will bring goods to places at the right time and price. In order to reduce the cost of transportation, a company may reduce the number of carriers, consolidate deliveries and by single sourcing4. In reducing the number of carri ers, grownup volume of works will be given to selected carriers and they will be able to give lower rates. Deliveries may also be consolidated if the trip is based on weight, exceed and other variables so that fewer trips will be made. Single sourcing of carrier, the company is getting quotations from several carriers detailing what is required. The company may select the best quotation that can meet the requirements and evaluate if the carrier can dress on the whole duration of the contract. If the carrier has these qualities, the company can get a potty of saving on having single carrier.5. Increased inventory holding costsHolding costs are cost associated to stocks that are not yet sold5. It includes labour costs, space or rental, costs of damaged goods and other expenses related on keeping the stocks. The company must determine the level of volume of stocks that it needs to keep in order to avoid these costs. Holding cost is also an opportunity cost because having lot of sto cks would mean tying the hard currency on the stocks instead of using the change on other parts of operation of the company.Inability to integrate processes through the supply chain to share informationSupply chain involves information sharing. Supply chain links companies to other companies. If information are share between companies, it will be available on a real time basis and the companies will be able see the demand and with the ultimate goal of meeting the demands of customers. When companies have reliable and accurate shared out information, their processes will be synchronized. All the processes are done to meet what is required. Uncertainties are reduces which results to holding low level stocks that is just right to meet the customer demand.Poor inventory management.Inventory management can be successfully implemented if a company can make a purchase plan that will ensure that what they hold is just what is needed. It is not as well much or too less. Just in time inv entory is a good strategy to keep inventory at a certain level wherein the company plans to receive goods only when it is needed thus reducing significantly holding costs. A company can successfully implement through a purchasing plan which schedules delivery of material through the forecasts and projections made on sales.Cash flow worrysReducing costs and avoiding cash flow problems are benefits of effective supply chain. Holding large volume of unnecessary stocks at a given period will cause cash flow problem in a company. retention these stocks is equivalent to costs and cash outlays. The company will pay large amount to suppliers but the stocks are not yet sold, tying the cash to the stocks. This will affect the liquidity of the company and can cause problem in a company.Referenceshttp//www.shelfplus.com/material-handling-hotline/ten-ways-to-reduce-inventory/http//viktorwong-logistics.blogspot.co.nz/2012/06/characteristics-of-supply-chain.htmlhttp//erp.cincom.com/2012/10/the-w icked-wastes-of-warehousing-2/http//en.wikipedia.org/wiki/Manufacturing_resource_planninghttp//logistics.about.com/od/forsmallbusinesses/a/Reducing-Transportation-Costs.htmhttp//www.investopedia.com/damage/i/inventory-management.asphttp//www.investopedia.com/terms/h/holding-costs.asphttp//www.investopedia.com/terms/d/distribution-network.asphttp//www.adam-europe.eu/prj/7095/prj/CourieL_WP2_Chapter2_final.pdf1 Investopedia. Just in Time. July 2014. Retrieved from http//www.investopedia.com/terms/j/jit.asp2 Investopedia. Distribution Network. July 2014. Retrieved from http//www.investopedia.com/terms/d/distribution-network.asp3 Business Dictionary. Distribution Strategy. July 2014. Retrieved from http//www.businessdictionary.com/ description/distribution-strategy.html4 Murray, M. Reducing Transportation Costs. July 2014. Retrieved from http//logistics.about.com/od/forsmallbusinesses/a/Reducing-Transportation-Costs.htm5 Investopedia. Holding Costs. July 2014. Retrieved from http//www.i nvestopedia.com/terms/h/holding-costs.asp