The Importance of Supply Chain Management

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Time is the primary distinguishing factor between traditional channels of distribution and the modern supply chain. In the traditional distribution channels, a lot of time is taken to get orders from customers and deliver the ordered products. The main reason for this delay is because the conventional firms do the delivery on their own because they do not specialize in transportation. Other disadvantages of traditional distribution are that there is a lot of costs that are incurred during the ordering and delivery of products as well as paying for spaces occupied by their stock in warehouses. On the other hand, modern supply chain differs from traditional distribution channels because of the specification and need of customers (Christopher, 2016). Current supply chain does not have to maintain massive inventories and stock because customers tend to favor commodities that have been made just for them which helps in effective management of costs. The emerging changes in technologies also have facilitated easy and fast delivery of products to customers unlike in the traditional distribution channels whereby the firms did the delivery themselves. The fact that new firms hire logistic specialists makes it possible to promise customers, the time in which the goods will be delivered. The internet has acted as a bridge to facilitate the fast and cost-effective delivery of ordered products to customers.

Supply chain management encompasses the process of managing the flow of goods and services which involves activities such as storage of raw materials, Keeping inventories and transporting finished goods to consumers. Node businesses and interconnected networks join hands providing the required products and services needed by customers in the end in a supply chain (Jacobs et al., 2014). Supply chain management involves designing, planning, control, execution and monitoring activities involved in a supply chain with the objective of maximizing productivity and thus high profits. Research is being done on topics such as risk management and sustainability which are aimed at the improvement of the supply chain sector. A good example is the OEMs which include Airbus, Bombardier, Boeing and the manufacturing and distribution of aircraft.

Seven fundamental principles of the supply chain have been drawn from the most successful managers with the aim of helping other managers to manage their supply chains successfully. One of the principles is customer segmentation depending on their needs (Christopher, 2016). Segmentation helps to identify new marketing opportunities, develop new distribution strategies and improve customer service. The second principle is customizing the logistics network with the aim of having service requirements and gain profits from customer segments. The third principle is listening to market signals to be able to be able to align demand with planning which ensures that there are optimal resource allocation and consistent forecasts.

Another principle is the differentiation of products closer to the customer as well as increasing speed across the supply chain. The two techniques facilitate quick delivery of services to customers. The fifth one is the management of the supply source which aids in the reduction of costs of services and real ownership (Jacobs et al., 2014). Development of a comprehensive technology in the chain supply is the sixth one. It gives an opportunity for decision making and makes a clear flow and view of the products, information, and services. Lastly, it is imperative to develop measures of channel spanning performance because they help in measuring the end success and determining effectiveness and efficiency.

Manufacturing postponement involves the production of one product at a time without plans of producing more of the same before knowing the exact customer preferences. For instance, Dell Computer Company cannot provide laptops unless ordered by customers. The geographic postponement, on the other hand, is whereby the company produces the product and stores it in the warehouse awaiting order by customers after which they deliver the product as fast as possible (Jacobs et al., 2014). For instance, the dell company produces a massive number of laptops and awaits to receive orders from potential customers. Manufacturing postponement has the objective of minimizing uncertainties and risks while on the geographic delay is focused on fast delivery of products.


Christopher, M. (2016). Logistics & supply chain management. Pearson UK.

Jacobs, F.R., Chase, R.B., & Lummus, R.R. (2014). Operations and supply chain management (pp. 533-535). New York, NY: McGraw-Hill/Irwin.

October 24, 2023

Business Economics

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