Supply chain management is a collaborative approach to getting goods from manufacturer to consumer. The primary goals center on shared efficiency, optimized transportation and utilization, quality improvement and long-term stability.
Managing inventory, transportation and logistics is complex and costly for companies that don't have an effective system. When manufacturers, wholesalers and retailers collaborate on a supply chain system, it is easier to ensure efficiency. In many cases, suppliers and buyers in a channel share inventory data, which allows for fast replenishment of inventory to meet customer demand. Efficiency in getting goods to the right place at the right time minimizes inventory costs and meets customer demand.
Optimized Transportation and Logistics
The umbrella concept of supply chain management encompasses transportation and logistics. In an independent business environment, each company is responsible for its role in ordering, shipping and transporting goods. In this structure, costs are high and timing is poor. With supply chain management, vendors and buyers plan optimized transportation and logistics activities. Orders are automated between a reseller and a vendor, and vendors quickly pull, ship and transmit orders to buyers for clear communication.
Getting consumers the best value is a shared goal of supply chain partners. To closely connect is the objective of perpetual quality improvement. Retailers, as the most direct link between consumers and goods, are the ones who often hear formal and informal feedback about product quality. In a collaborative supply chain, a system exists for retailers to communicate customer feedback with wholesalers and manufacturers. This feedback enables manufacturers to address defects and deficiencies, and to focus on constant improvement of products. Quality improvement objectives help all channel members win because consumers recognize value.
By forming strong trusting supply chain relationships and working toward best practices in distribution, companies aim for long-term stability. Collaborative planning, coordination and distribution activities spread the risks of business decisions across multiple companies. As each company looks for improvement opportunities, a common result is stabilization in industry business activities. Strong demand forecasts allow all channel members to respond to production or buying variations. Shared interests in meeting customer needs also cause each participant to communicate on optimizing distribution systems.