connection between manufacturers, consumers, distributors, and suppliers SCM
SCM, which refers to the connection between manufacturers, consumers, distributors, and suppliers, is one of the significant factors that influence organizational performance. Supply chain management is associated with the movement of not only the finished commodities but also the flow of information right from the suppliers up to final consumers. Such flow of products and information is critical in enabling individuals to meet their day-to-day needs. Maximizing efficiency and reducing the costs involved in the supply chain process is vital towards allowing the organizations to maximize sales and profits. The paper reflects on some of the basic strategy moves that can lead to maximization of efficiency and reduction of the transportation costs involved in the process of supply and an analysis of the essentiality of such considerations as far as profit maximization is concerned.
There are diverse strategic approaches that can enable an organization to optimize supply chain management and maximize the amount of profits realized out of the investment endeavors. The formulation of an active internal supply council is one of the strategic measures towards maximizing efficiency. Lack of a clear strategy for efficiency is a significant factor that hinders smooth flow during the supply process. Coming up with such a council is an essential consideration that can enable an organization to enhance efficiency. The consolidation of shipments is the second approach through which organizations can reduce transportation costs (Hanbazazah et al., 2019). The adoption of shipment consolidation leads to fewer trips when delivering raw materials or finished goods hence reducing the costs of transportation. Similarly, having fewer carriers is another move that can enable managers to minimize transportation costs. As a vice president dealing with the supply chain, it is fundamental to choose the best carrier which offers services at the lowest charges possible to ensure that the costs incurred are reduced.
It is fundamental to measure the effectiveness of the strategies adopted to determine their viability. Measuring the effectiveness of the strategic approaches utilized to minimize costs is a critical move to enable one to determine whether the organization is geared towards the attainment of the desired functional outcomes or not. Inventory measurement is an essential metric to facilitate the determination of the effectiveness of the strategies used. A drop in inventory costs is a crucial indicator showing that the strategic measures adopted are effective. On the contrary, a continued increase in inventory or stagnation shows that the approaches considered are not effective in achieving the desired outcomes. Secondly, the organization’s working capital is an essential metric to facilitate the determination of the effectiveness of the measurers formulated to minimize transportations costs in the supply chain. Working capital presents an organization’s current operating liquidity (Uremandu et al., 2012). Such a metric will facilitate the determination of the effectiveness of the measures adopted.
In summary, perfection in supply chain management is essential in enabling organizations to attain the desired functional goals. SCM entails all the processes associated with the flow of raw materials from the suppliers to the company and the flow of finished goods from the organization to consumers. As a vice president dealing with the supply chain, it is fundamental to adopt measures to help the organization to maximize efficiency and reduce the costs involved in transportation and other operational processes. Having an active council to deal with supply chain, consolidating shipment, and the use of fewer carriers will enable an organization to reduce the costs involved in the process of transportation. The effectiveness of such strategic approaches can be analyzed by analyzing the inventories and working capital. The reduction in the two shows that the measures adopted are effective.
References
Hanbazazah, A. S., Abril, L., Erkoc, M., & Shaikh, N. (2019). Freight consolidation with divisible shipments, delivery time windows, and piecewise transportation costs. European Journal of Operational Research, 276(1), 187-201.
Uremandu, S., Ben-Caleb, E., & Enyi, P. E. (2012). Working capital management, liquidity, and Corporate profitability among quoted firms in Nigeria: Evidence from the Productive sector. International journal of academic research in accounting, finance, and management sciences, 2(1).