Adequate supply management is directly related to the revenues and costs of a company. Understanding this relationship is critical for the manager to keep cash flow in balance. When this relationship is disregarded, the company could have great financial losses, which involve wastage and reduction in billing.
Read the post and understand more about how supply management impacts on revenues and costs of your company!
The objectives of supply management
Managing the supply chain properly consists of strategically keep managing flows that involve it (goods, finance, information and services) and the relationship between the companies. The purpose is to achieve and support the company’s goals.
Supply Chain Management is a set of methods used to provide more integration and improve the administration and control of all network parameters, ie transport, inventory, costs, and so on . These parameters are present in the company itself, in the suppliers and in the customers.
Supply management allows you to upgrade the production process and deliver the right products to the customers, in the ideal quantity. Of course, by optimizing management, costs will be reduced along the chain, taking into account customer requirements.
Reduced costs in the supply chain mean lower costs for the customer, so there will be a good quality product in price and the desired conditions. The satisfied customer will be more likely to be loyal and recommend the company to other consumers, contributing to the increase of revenue and profits.
Supply management and the main costs involved
In logistics, it is necessary to consider all the possibilities of cutting and reducing costs by avoiding, among other things, the costs of unnecessary investments (such as excessive shopping to stock).
Transportation can generate surplus costs and, for that reason, it is advisable to choose the most appropriate modal according to different factors, such as deadline, type of product, more appropriate form of packaging, accessibility, distance and other things. It is important to negotiate transportation costs in advance.
Inventory maintenance involves several costs, which can be classified as:
- capital costs (you have to use financial resources in the stock, giving up other investments that could be much more profitable);
- service costs (insurance and taxes);
- space costs;
- risk costs (deterioration, obsolescence, damage, relocation).
The supply chain management model
Any supply management model should consider efficient ways to improve income gains in the following activities:
- forecasting and planning the supply-demand balance;
- location of suppliers of raw materials;
- product manufacture and storage;
- delivery of the product to the final consumer;
- reverse logistics (which is the process of returning the product by the customer, if necessary);
- feedbacks through customer service and process optimization.
Ways to Improve Supply Management
To improve the management of supplies and achieve lower costs and increase in revenue, the manager must:
- improve collaboration and communication between the company and suppliers;
- keeping inventory levels as low as possible, using Just In Time (request for replacement only at the right time);
- outsourcing services, as long as it implies lower costs (transport, storage, production).
It is also worth investing in communication technology to ensure that the raw material is always available and to reduce the time of ordering / delivery to customers. You can use information technology (software, ERP, WMS, VMI, SCM) and promote larger and discounted purchasing decisions based on spreadsheets and calculations, not just intuition and last minute needs.
How does the management of supplies impact the revenues and costs of the company in which you work? How do you keep track of inventory? Are you using appropriate technology yet? What about outsourcing services? Leave your comment in the space below!
ORBIT Logistics is one of the world’s leading suppliers of inventory management solutions (VMI – Vendor Managed Inventory and SCM) and real-time data acquisition.
Our company, founded in 2003, provides a modular system for supply chain management and automation, serving global customers from offices in Leverkusen (Germany), Atlanta (USA), Sao Paulo (Brazil) and Shanghai (China). A highly qualified team of more than 40 engineers and technicians offers customized turn key solutions for process management and monitoring.
For more information:
ORBIT Logistics Brasil
Phone: (55 11) 3796-1755 / 1756
Cell phone.: (55 11) 96420-1701