The Benefits of Successful Supply Chain Management

For any small business, a commitment to developing a supply chain management system is not a

small undertaking. It involves the commitment of significant financial resources for the

acquisition of appropriate software. Policies and procedures must be changed in accordance

with the needs of the new system. Personnel must be trained in not only using the new software

but also adapting to new ways of doing business. Small businesses accept these challenges of

adopting supply chain management systems because such systems are viewed as being

important for long-term survival and because businesses anticipate substantial management

and economic benefits.

The management benefits of supply chain management system include the following:

• Silo busting. By their very nature, supply chain management systems improve communication across all

functions within a business. This leads to employees having a better understanding of the entire

operations of a business and how their work relates to the overall benefits of the business.

• Improve communications with suppliers and customers.Improved communications with

customers enhances the overall value provided to those customers. The improvement in customer

satisfaction leads to longtime relationships, which yields significant economic benefits. Improved

communications with suppliers improve the overall operational efficiency of both participants, reduce

costs, and improve profits.

• Supplier selection. Supply chain management systems can help businesses evaluate prospective

suppliers and monitor the performance of current suppliers. This capability can lead to strategic sourcing

and significant cost savings plus improvement of the when- and where-needed variables.

• Improvements in purchasing. The automation of purchasing reduces errors and improves the

economic efficiency of the purchasing function. Disciplined purchasing can allow for the full exploitation

of available discounts.