In business companies that manufacture or produce products are reliant on a functional and efficient supply chain. Supply chain planning is the process of forecasting specific supply chain needs as it relates to raw materials, production, distribution, and consumer demand. When properly implement a supply chain plan allows a company to reduce waste, reduce expenses, increase responsiveness to externalities, quickly meet demand, and decrease turnaround time.
Five Advantages of Supply Chain Planning
In addition to the advantages mentioned above, there are other advantages a well-managed supply chain offers that can improve daily business and operations.
1. Better Manage Inventory
One of the most notable advantages of supply chain planning is you have better control and knowledge over your inventory. This is highly useful as it allows you to avoid situations where you run short of finished products, run out of raw material during production, or the opposite problem where you overproduce stock which can easily go to waste.
2. Reduce Bottlenecks
Your company’s supply chain likely relies on several suppliers each providing goods and materials you need in daily business activity and production. However, not all of these items will be delivered at the same time or in the same amounts also the need for specific materials can also vary. Without a well-planned supply chain, it is very easy to encounter situations where you have too little of one material while having enough of other materials. This can create bottlenecks in production and slow down your ability to produce products while also decreasing your overall efficiency. With supply chain management you always have material on hand, can respond to shortages, and have a system in place to ensure proper orders are made.
3. Better Control Product Lifecycles
A key aspect of production is managing your products’ lifecycle. While some industries only see updates on a semi-regular basis others can see improvements on existing products every year. Part of the product life cycle is when an older product is retied you need to seamlessly introduce its replacement or an updated model. With supply chain management you can handle the production needs to introduce a new product into the marketplace without delays or shortages.
4. Better Data
Another useful aspect of supply chain data is that it increases the availability and accuracy of your company’s data and reports. Such information is vital as it allows you to make informed discussions, improve existing strategies and handle time-sensitive issues such as just in time manufacturing with greater accuracy.
5. Improved Customer Satisfaction
Finally, better control of your supply chain increases customer satisfaction. For example, if you have a mass-market product that is very popular you can limit the number of sell-outs and increase product production to meet customer needs. This adaptability is also useful for situations such as large orders, new clients, expanding into a new market, and company mergers or buyouts.
For a business to succeed you need to be able to handle the many data points that go into product development and manufacturing. Your supply chain if not properly managed can lead to waste, increased expenses, delays in production, and negatively impact daily business activity. With proper supply chain planning, you streamline your company, make it more efficient, and improve the use of company resources and capital.