Key Benefits of Supply Chain Management for the Retail Industry
Retailing is a major part of every economy in the world, and it contributes to nearly 40 percent of the US economy. Until recently, supply chain management has been fundamentally viewed as a necessary evil, with the main focus on cost reductions. With supply chains becoming more global, the pace of demand changes is increasing and product life cycle dwindling. The responsiveness of a company’s supply and fulfillment networks becoming a more significant determinant of company success. Companies need to view their supply networks as a competitive weapon to not only deliver low costs but also effect top-line growth. This can be achieved only by exceptional responsiveness and best-in-class customer service. Many companies are coming to the realization; however, that supply chain management can be strategic and can provide a company the opportunity to out-perform competitors.
As the competition in the retailing industry in the recent past has developed enormously, the customers are now demanding more services. Retailers are therefore offering a broad variety of products at lesser prices and providing elevated levels of services in their supply chain to achieve a competitive advantage. Some of the chief benefits of supply chain management are listed here.
1. A proficient supply chain management practice facilitates the retailers to reduce the inventory carrying costs. There is also a proliferation in the responsiveness to the orders of the customers.
2. An efficient supply chain management helps reduce the lead time, thereby making products readily – accessible to the customers.
3. Effective supply chain management aids in enhancing all business processes, like data accuracy, operational complexity reduction, supplier selection, purchasing, warehousing and distribution for the retailers, etc.
4. With an efficient supply chain, retailers can provide a diversity of product mix at reasonable prices to the customers.
5. Effectively managing the supply chain solutions can help conserve operational and transportation costs in the retailing industry.
6. The use of various technologies in the supply chain helps a retailer can obtain benefits of maintaining good relation with manufacturers. With the use of RFID the inventory can be tracked, and ERP aids in increasing the performance of the supply chain.
7. The supply chain can enhance customer satisfaction, if the quality is maintained throughout.
Supply chain management is very important for the retail industry as it provides its services directly to the customers. Retail companies can enhance service and increase supply chain velocity by improving upstream and downstream processes. Therefore an effective supply chain provides competitive advantage for all retailers.
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