A robust supply chain management process can improve customer happiness and lower cost

A robust supply chain management process can improve customer happiness and lower cost
Image Courtesy: Shutterstock

A fine-tuned supply chain management process ensures that transforming raw materials into finished products is efficient and cost-effective. Improved customer happiness and better ROI are two important benefits of supply chain management. Think of yourself as travelling in an old, clunky vehicle and reaching your destination slowly and only after a lot of waste of resources. Conversely, with a new vehicle and an efficient engine you could go from point A to B faster, with fewer resources. This is what supply chain management does. However, as the example shows, supply chain management requires some investment and that is where supply chain finance can help.

To know how supply chain management and timely financing can lead to customer satisfaction and lower costs, read on.

What are the 5 steps in the supply chain management process?

The supply chain management process can be divided into these basic blocks:

  1. Plan: You develop a strategy that showcases how your products and services match the needs of your customers. The goal is to achieve a great product-market fit, maximise profits, and satisfy customer expectations. Planning involves elements such as forecasting as well as deciding to manufacture a product domestically versus internationally.
  1. Source: You form a strong network of suppliers from whom you can procure raw materials or acquire services. Apart from achieving the best possible pricing, sourcing should be adequate and timely if customer demand is to be met consistently. It involves elements such as purchase order processing.
  1. Make: In the manufacturing phase your business focuses on activities such as design, assembly, production, testing, packaging, and release. Good manufacturing aligns itself with the desires of the customer. 
  1. Delivery: This is the logistics phase, in which you facilitate the delivery of goods to the customer. Delivery includes everything from processing customer inquiries and managing warehousing to assessing transport options and addressing import-export requirements. A timely and good fulfilment process is key to customer satisfaction and retention.

 Return: In this phase, you manage defective, damaged and returned goods, examining their condition, scheduling shipments, issuing refunds, and more. A good experience with returns has shown to improve customer loyalty.

 How does supply chain management help your business?

Supply chain management organises all the resources and activities involved in providing customers with the best product at the best price. Hence, the direct effect of a robust supply chain management process is enhanced customer satisfaction and lower end-user costs.

 If you are a manufacturer of consumer electronics such as mobile phones, printers, laptops, home theatre systems, and so on, your supply chain management process could involve planning products for niche demographics, sourcing partially-built products from abroad, assembling products as per precise specifications, delivering them to various locations, and handling returns. It’s easy to see how a well-coordinated and streamlined supply chain would result in enhanced customer satisfaction, lower costs, better ROI, and increased efficiency.

 How does supply chain finance help in supply chain management?

The supply chain involves a complex network of buyers and suppliers and at each juncture, there is a need for liquidity. Otherwise, the supply chain could come to a grinding halt or certain parts of it may prove to be bottlenecks. Maintaining enough liquidity in the supply chain is easier said than done as the different players in the supply chain manage and process payments on different timelines. For instance, you may want an invoice to be cleared within 30 days, but your buyer will only do so in 90 days.

Two ways by which supply chain finance eases the financial strain on the supply chain are:

  1. Invoice discounting: If your business’s cash flow is stuck in unpaid invoices, you can approach a lender to quickly avail a percentage of your receivables for your daily requirements such as purchasing raw materials and paying wages. This way your buyers remain happy, and you are not deprived of liquidity.
  1. Purchase order financing: If you have a large purchase order you can leverage it to obtain capital from a financier. With the capital, your supplier can fulfil the order and with PO financing you avoid declining large orders, maintain relationships, and keep your cash reserves intact.

Bajaj Finserv offers supply chain finance comprising both invoice discounting and PO financing. Businesses can easily obtain funding of up to Rs. 45 lakh on cost-effective terms and within a window of just 24 hours. With a timely injection of funding, your supply chain can become more stable and efficient. Also, customers get their products on time and so, customer satisfaction does not take a hit. To get approval for supply chain financing within 1 day* all you need to do is apply online and provide the required documents.

*Terms and conditions apply

MumbaiLive would like to send you latest news updates