8 Benefits of Supply Chain Management to Boost Your Business

What Is Supply Chain Management?

Supply chain management, also known as SCM for short, is a critical function for manufacturers, distributors, wholesalers, and retailers alike.

SCM involves the planning, execution, and monitoring of processes related to sourcing, manufacturing, inventory, demand, transportation, distribution, and returns from raw materials to the end consumer.

Proactive supply chain management helps maximize customer value and enables organizations with a major competitive advantage. In this piece we will explore SCM functions and benefits for both shippers and logistics service providers (LSPs).

Business functions that are impacted by supply chain management:

SCM helps organizations answer foundational questions that are essential to their business plan and daily operations. Take for example the different topics below:

Trade Intelligence

International Supply Chain

Domestic Supply Chain

Fleet

E-commerce

Identifying and implementing supply chain management solutions to help address these questions can open the door to significant opportunities for performance improvement and profitability. Even more benefits can be realized when utilizing a single provider for multiple SCM solutions when considering security, user training, professional services, and IT investment.

The Importance of Supply Chain Management for Shippers

Shippers are constantly seeking ways to transport their goods in the most efficient, timely, and cost-effective manner. Effective SCM enables shippers to have better control over their inventory, manage shipping schedules more accurately, and reduce costs. Some example key performance indicators (KPIs) to set continuous improvement processes around include:

The Importance of Supply Chain Management for Transportation Partners

Freight brokers/forwarders and carriers form the backbone of the supply chain industry. Effective supply chain management plays a pivotal role in optimizing the interactions and operations of shippers with their carriers and brokers, ultimately boosting the connection & communication for a smoother operation.

For Freight Brokers/Forwarders:

Freight brokers and forwarders often act as the critical link between shippers and carriers. SCM is indispensable for them, as it provides the tools and insights needed to gain real-time visibility into carrier availability, freight rates, and shipment statuses. This not only improves the brokerage experience but also enhances their ability to make a profit and provide value-added services to their clients, such as performance reporting and solutions to achieve greater utilization, lower emissions across the supply chain.

For Carriers:

Carriers are at the heart of the supply chain, responsible for the physical movement of goods. For them, SCM is crucial in maximizing fleet utilization, optimizing routes, and reducing empty miles. Advanced supply chain management systems allow carriers to access a broader network of shipping opportunities, improving load matching, and reducing turnaround times.

What are the Benefits Supply Chain Management Can Provide?

Enhanced Visibility and Control

The first and foremost advantage of SCM is the unparalleled visibility it offers into every aspect of the supply chain. Solutions that offer real-time tracking provide businesses with up-to-the-minute information on shipments/loads. This level of insight facilitates proactive decision-making, minimizes the impact of disruptions, improves the customer experience, and enhances overall operational transparency—a critical factor in today’s demand-driven market.

Cost Reduction and Optimization

Efficient SCM is synonymous with cost savings and operational efficiency. By optimizing loads, selecting the right mode, building multi-stop routes, and sourcing better rates, businesses can significantly lower transportation costs. Furthermore, advanced analytics and forecasting tools enable companies to better predict demand, manage inventory levels, improve communication that ultimately leads to a more agile supply chain.

Improved Customer Satisfaction

In today’s fast-paced world, customers expect quick, reliable, and transparent transportation services. A quality supply chain management solution allows businesses to meet these expectations consistently. Utilizing high quality and timely data & analytics, LSPs and shippers can ensure timely deliveries and maintain a high level of service quality.

Risk Mitigation

Logistics-intensive businesses face many risks on a daily basis:

Through supply chain management strategies (that include back-up strategies), equipped with real-time monitoring and predictive analytics, shippers, freight brokers, and 3PLs can dampen the damage posed by potential disruptions and industry risks. This risk mitigation is crucial in maintaining operational efficiency.

Sustainability and Ethical Responsibility

As global awareness of environmental and ethical issues grows, sustainable supply chain practices have become a business imperative. As end-consumers consideration of Environment, Social, Governance (ESG) factors when making purchases continues to grow, effective SCM will enable companies to monitor and optimize their carbon footprint, ensure ethical sourcing practices, and comply with environmental regulations, thereby aligning business operations with their customers and corporate social responsibility goals.

Improved Operational Efficiency

Effective supply chain management streamlines operations by optimizing various processes, from sourcing to product delivery. A good SCM solution helps integrate and optimize all facets of operations, ensuring a smoother flow of materials and information across the supply chain. With SCM, businesses can reduce process complexities, minimize delays, and eliminate redundancies. This streamlined approach results in faster turnaround times and more reliable warehouse operations and production schedules.

Greater Flexibility and Responsiveness

Supply chain management empowers companies with the agility to swiftly adjust to disruptions, market fluctuations, and evolving customer needs. This helps operations teams maintain a competitive edge and relevance in the marketplace. This flexibility also ensures that businesses can proactively respond to various challenges and opportunities, keeping them at the forefront of their industry. With SCM, companies are better positioned to meet the dynamic demands of the market, aligning their operations with current trends and customer preferences.

Better Relationships & Collaboration

A strong logistics management platform promotes healthy relationships with suppliers and other parties, which can lead to better pricing, quality, and reliability. By streamlining interactions and coordination efforts, the result is faster adaptability to market shifts and supply chain interruptions. Effective inventory control is another benefit, ensuring product availability aligns with demand, thereby reducing instances of excess stock or shortages. Furthermore, the analytical capabilities of an advanced SCM platform provide deep insights, aiding in strategic planning, improving forecast precision, and encouraging ongoing enhancements throughout the supply chain.

Real World Example of Supply Chain Management

Challenge:

A case study done with Albertsons Companies Inc., the second largest supermarket chain in the United States, found that the lack of supply chain visibility significantly inhibited their logistics management.

Albertsons became concerned about their product spoilage, in this case, fresh produce. In the event of delayed shipments or disruptions, Albertsons needed a contingency plan in order to ensure that produce stayed fresh and to avoid losses.

Solution:

Albertsons identified the need for a supply chain management and visibility platform to minimize the impact of shipment disruptions, and ultimately save their product from spoiling.

After integrating with a supply chain management and visibility platform, Descartes MacroPoint, Albertsons was able to avoid disruptions and greatly enhance productivity.

Results:

Final Thoughts

The transformative power of supply chain management (SCM) in enhancing business operations is undeniable. As the comprehensive case study of Albertsons demonstrates, integrating advanced SCM solutions like Descartes MacroPoint can lead to significant improvements in visibility, efficiency, and collaboration across the supply chain.

By optimizing every aspect of SCM, from real-time tracking to inventory management, Descartes MacroPoint equips freight brokers and shippers to navigate the complexities of today’s market with confidence.

Speak with a Descartes member of our team today to get started.