What are the Five Components of Retail Supply Chain Management?
Retail organizations across the globe are implementing supply chain management systems to control the movement of inventories and maintain product quality. Effective implementation of supply chain management helps to differentiate various terms of delivery along with the service offerings. It is vital for optimizing customer service and maintaining the cost of goods.
Supply chain management is a process of streamlining the flow of physical goods from the production line to the final execution stage at various production levels. The concept of a supply chain management system has proved to be a game changer in revolutionizing the global trade and business scenario.
Why is Retail Supply Chain Management Important for Organizations?
Retail supply chain management is essential for businesses to help them achieve their business objectives. Implementation of supply chain management helps control the manufacturing processes, improve product quality and help organizations build a solid customer base.
Supply chain management contributes a lot to enhancing customer service and helping them remain agile and handle the unexpected challenges of the global market. A streamlined business process will help the organization increase visibility and diagnose the problems to find an appropriate solution. Apart from this, it helps to improve supply chain management and allows companies to maximize their profit margins.
Retailers across the globe are facing innumerable challenges in fulfilling the customer’s expectations. Your ability to process fulfillment and deliverability sets you apart from others to stand out in retail. Organizations with a streamlined supply chain will create a more significant impact to gain a competitive advantage and emerge as winners.
Five Components of the Supply Chain Management
Handling the entire supply chain is quite an arduous task. However, it can be further divided into five components to help you understand the functions of supply chain management.
The components of supply chain management are mentioned below:-
(1.) Planning
Companies across the globe are looking forward to managing the resources that can help them meet their customer’s expectations. Planning is the first stage of supply chain management. This initial stage requires the development of metrics to handle the supply chain so that it is easy to control the costs and deliver quality products to the customers.
(2.) Sourcing
At this stage, the companies look for suppliers capable of delivering the goods and services per the business’s requirements. Supply chain managers can work to develop a set of pricing to process payments to maintain transparency and improve the relationships with the clients. Managers can combine goods and services, including receiving and verifying shipments and transferring them to the manufacturing plants.
(3.) Inventory
Organizations must collaborate with multiple suppliers to handle the raw materials and product shortage during the production cycle. The supply managers are responsible for scheduling the activities necessary for production, packaging, testing, and preparation for product delivery.
Apart from this, manufacturing is one of the intensive portions of the entire supply chain, allowing the organizations to check the quality levels, production output, and productivity of the team members.
(4.) Transportation and Production
The fourth element of supply chain management helps the organizations to ensure that the correct volume of products is manufactured. This is one of the most critical components of entire supply chain management. Apart from this, storing the finished products in the warehouse and transporting them from various warehouses is also one of the prime factors helping the organizations streamline their production cycle.
(5.) Return of Goods
This is one of the post-delivery customer support processes related to all kinds of returned products. It is known as reverse logistics. In case of damaged products, the supply chain managers need to work closely with the customer care executives to get feedback on the damaged products. The managers need to set up a network to handle the defective products. The more flexible the return policy, the higher customer satisfaction will be.
The Final Takeaway
Staying updated with the five components of supply chain management will enable you to handle the activities more efficiently. These are the essential elements of supply chain management that leaders look at while making strategic decisions. Each component is crucial in supply chain management for the vertical diversification of the organization.
The digital transformation across the globe and cutting-edge technology will help to minimize the complexities of the supply chain, enabling organizations to maximize their output and gain a competitive advantage.
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