Supply chain management: the key to efficiency

15 June 2021

Optimal supply chain management (SCM) is essential for the success of any business. Supply chain management affects all the stakeholders participating in the supply chain. To detect inefficiencies and opportunities, they must all have clear visibility of the flows of goods and services involved in it. Only in this way can you manage your supply chain effectively and ensure your company’s competitiveness. 

Slashed delivery times and reverse logistics have compelled organisations to implement digital systems that guarantee integrated supply chain management, coordinating its multiple links. 

What’s supply chain management?

The concept of supply chain management refers to the organisation of the flows of goods and services that play a part in the design, creation, storage, sale, and delivery of a product. In the end, the supply chain constitutes the life cycle of a good, from conception to consumption. As such, its proper management depends on the success of the company.

Nowadays, omnichannel retail, that is, the variety of sales channels available between a business and its customers, has made managing the supply chain more complex. Information flows have gone from being one-way to multidirectional. 

In the face of this added difficulty, software comprises a fundamental part of supply chain management. A good example of this would be warehouse management systems (WMSs) and enterprise resource planning (ERP), that is, computer applications that coordinate the supplier–customer relationship with the product, information, and financial flows.

Returns management has become one of the most complex phases of the supply chain
Returns management has become one of the most complex phases of the supply chain

Transformation towards digital supply chain management: examples

The emergence of new technologies has paved the way for Supply Chain 4.0. Companies have had to share information about their processes as well as the logistic attributes of their products and/or raw materials in order to manage product traceability throughout the value chain. 

For that reason, and to ensure modern and collaborative supply chain management, it’s necessary to install digital management solutions such as ERP, WMSs or manufacturing execution systems (MESs), which facilitate data integration between companies. 

In fact, ERP guarantees the creation and transmission of invoice, sales, and order documentation between departments such as the sales and customer service divisions; the objective of this is to control such complex stages as supplier procurement and returns. 

Permanently connected to this software, the WMS ensures that the business’s logistics expenses will be considerably reduced. In phases as costly for a supply chain as storage, order prep, and dispatch, this app guarantees efficient organisation between the various supply chain links, automating picking shipping routes to provide end customers with agile service.

For that matter, there’s logistics software on the market with advanced features to analyse, through KPIs, the performance of each stage in the supply chain. The goal here is to pinpoint inefficiencies and improve decision-making in the warehouse. This is the case of the Easy WMS Supply Chain Analytics module from Mecalux

What’s more, a WMS makes it possible to reduce inventory, both in the storage facility and production centres. It does so by controlling stock turnover, the supply buffers, and the location of each SKU. 

Thus, a forward-thinking supply chain must be collaborative, interconnected, and in favour of technologies such as IIoT (Industrial Internet of Things), big data, and blockchain. In short, integrated logistics management must be established by means of companies that monitor a product’s performance during each step, detecting inefficiencies and introducing changes to become increasingly flexible and effective. 

Integrated supply chain management makes it possible to pinpoint inefficiencies
Integrated supply chain management makes it possible to pinpoint inefficiencies

Benefits of integrated supply chain management

Having a supply chain management plan in place is highly advantageous for businesses. These are the main pluses: 

  • Product control and traceability: one advantage of supply chain management is the guaranteed monitoring of a good in all the phases it undergoes in the value chain. 
  • Lowered procurement, manufacturing, and distribution costs: errors are reduced in essential tasks such as supplier deliveries, production line management, and order prep. 
  • Implementation of continuous improvement methods: the complexity of today’s market, especially due to omnichannel retail, is forcing companies to adopt continuous improvement policies, for example, the kanban system, poka-yoke, or the just-in-time (JIT) production system. By monitoring the performance of each operation, you can identify and steer clear of inefficiencies that decrease warehouse productivity. 
  • Improved customer service quality: logistics is one of the most complicated phases of the supply chain. Therefore, it’s vital to manage shipping routes so as to provide efficient last-mile delivery.

To sum up, integrated supply chain management allows you to eliminate mistakes in the various stages through which a product goes, from the procurement of the raw materials for its manufacture to its delivery to the end customer. 

In this context, it’s crucial that the organisations that make up the supply chain share information — of the good’s logistics attributes as well as the materials used to make it and the various stages it undergoes — with a view to adding value to the final item. This will result in a significant increase in the competitiveness of the product and, hence, of the businesses involved in its supply. 

Digital management systems such as ERP and WMSs are fundamental for having a modern and integrated supply chain
Digital management systems such as ERP and WMSs are fundamental for having a modern and integrated supply chain

Supply chain management: agility, flexibility, efficiency

In an increasingly global market, businesses are now competing on an international level as opposed to just locally. Consequently, traditional supply chain management has evolved into an integrated and digital modality: Supply Chain Management 4.0.

Efficient supply chain management makes all the links agile, flexible, and efficient. These are the key attributes for ensuring that your organisation remains competitive against the current backdrop. 

At Mecalux, we’ve implemented our digital solutions in 900 installations in 36 countries. If you’re looking to improve your supply chain management, don’t hesitate to contact us. One of our expert consultants will advise you on the best solution for your company.