Tag Archives: Cost-to-Serve

Supply chain management is a crucial part of every business, which has a wide range of effects, from the streamlined transfer of goods and services to improved customer satisfaction. In this digital age, it has become easier to understand the complexities or risks that affect the supply chain. In general, the supply chain exists in both the services and manufacturing organizations. However, the risk of complexity varies in different organizations.

Managing it effectively is not a simple task. It consists of several challenges and demands to constantly develop a new skill and update the existing one. By implementing effective tactics, you can easily enhance high supply chain performance.

Supply-Chain Essentials Every Manager Should Know

Here are a few things managers should know about managing the end-to-end supply chain from raw material to finished products.

1. Business Communication

If you want to be a leader in supply chain management, you have to communicate well. Depending on whether your company is dealing internationally or locally, being an efficient communicator will surely help you to gain some position in the marketplace. As a supply chain leader, you should be aware of the terms like ROIC, EBITDA, and economic profit. These technical terms must be part of your everyday vocabulary as you would be delivering schedules with suppliers.

2. The Know-How To Negotiate

Negotiation is pivotal in supply chain management. If you want to be successful in this industry, you have to be a good negotiator. Whether you are a lead or participant in negotiation, your skill will influence the relationship of the opposite party.

If you have negotiation skills, you will enter into the discussions looking for an outcome that will satisfy the results. Ask as many questions as you can. It will clear the doubt. An excellent negotiator pays close attention to the opposite parties’ behavior.

3. Customer-First Thinking Is The Key

Supply chain organizations should think about the customer first. This means thinking for the customer when making a decision about the supply chain. In order to gain a good relationship with your customers, you need to spend some time with them and understand their needs and considerations. By focusing on these parameters, you can shape a supply chain that satisfies the customer.

Building a customer-centric supply chain is not easy. All the departments, from suppliers to manufacturers, are involved in the supply chain. You must find new ways to meet customers’ needs and exceed their expectations. In 2021, Assignment Assistance UK formed a customer-centric marketing campaign, and the results were amazing, as the sale ratio exceeded their expectations.

4. Understanding Cost-To-Serve

Cost-to-serve is basically a cross-supply chain method used to focus on process-based costs. It helps in calculating the cost-effectiveness of product and market routes along with the customer profitability. Furthermore, it provides you with a fact-based focus to make decisions on operational changes and service mix for each particular customer.

If you can understand the cost-to-serve, you will be able to make decisions to improve the customer’s outcome. Some supply chain leaders have gifted skills, while others need to train themselves and require practice.

If you apply the cost-to-serve concept to your company’s supply chain activity, then you will be able to build a profitable relationship with customers and the production team. That’s why ease with the cost-to-serve is a good skill that helps you to stand out as a competent supply chain professional.

5. Data Is Everything

Data is crucial in business to formulate strategies, streamline operations, introduce new services, and ensure customer satisfaction. But data is nothing unless it is analyzed. I have seen that most of the decisions in supply chain activities are instinct-based, neglecting data analysis.

Always keep a keen eye on cost and never assume something is great because everyone loves new deals. Look at the facts and data and do not rely on emotions and instinct when making decisions. While concluding a literature review, Bob Tucker describes supply chain analytics as the ability to use data in order to improve all activities across the supply chain.

Since data analysis has been utilized for years, the introduction of new technologies like machine learning or artificial intelligence has led to contribution in today’s supply chain forecasting.

Benefits Of Following Supply Chain Essentials

The supply chain plays a vital role in boosting several business processes, including your relationships. Supply chain management isn’t a simple experiment, but effective supply chain management offers several benefits that improve the bottom line. Let’s look at some of the benefits of effective supply chain management.

a) Better Collaboration

In order to resolve any problem, the supply chain team should be able to share information with stakeholders and communicate with the right people at the right time. Consistent communication improves the relationship, which results in better collaboration and boosted business.

b) Improved Risk Mitigation

Having knowledge of risk help companies in achieving their goals. For instance, 87% of companies believe they could reduce inventory by 22% if they have a better risk management system. This all can be achieved by following the supply chain essentials.

c) Better Quality Control

The quality control process improves once a manager starts following supply chain essentials. Since, data analysis is used for decision making, it helps in producing quality products.

Quality control in the supply chain helps to maintain the company’s reputation. In this modern age, the main goal is to gain a unique place in customers’ minds. For this, the quality control subcontractor gives suggestions to companies to increase their benefits.

Conclusion

The supply chain manager focuses on a better relationship with all the members of the supply chain, including the customers. Today, the supply chain industry is growing rapidly. Hence, making a data driven-approach to supply chain management is a must.

Data is not only driven by effective supply chain management but there are also factors such as good vendor and supplier relationships, effective cost control, securing the right logistics partners and adoption of effective supply chain technologies. An efficient manager takes into consideration all these factors, which result in an improved supply chain process.

*This article is written by Claudia Jeffrey. Claudia is currently working as an Auditor at crowdwriter. She has previously looked after operations and customer service departments in the same firm. Claudia is keen to manage an effective supply chain process and believes in company growth with the customers. She loves to travel and explore the world.

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