Contents
Advantages of Supply Chain Management
Cost efficiency
Supply chain management assist in attaining cost efficiency within the organization. It aims at optimizing all process of business which bring down the production cost, packaging cost, warehousing and transportation cost and avoids any wastage of goods by facilitating timely delivery. It minimizes the overall operating expenses and enhances the overall profitability.
Enhance output
The concept of supply chain management aims at maximizing the overall productivity of business. Supply managers monitor all production processes and ensure that all resources are efficiently utilized. Any wastage of resources is avoided which lead to maximize the overall output.
Avoids delay in process
Preventing any delays of business process is one of the major advantage of supply change management. Supply chain manager ensure that all materials are timely acquired for facilitating uninterrupted production of products. Also, they regulate all delivery and logistics services of business which promote delivery at right time at right location thereby avoiding any delays.
Easily identify problem areas
Supply chain management enable business in recognizing its issue that are adversely affecting its reputation and profitability. Managers can easily track the performance of every department and identify which one is lacking in delivering its duties. In absence of this concept, it will be difficult to detect the issue and every department will blame each other for any problem that erupts.
Better collaboration
Process of supply chain management bring better collaboration among distinct parties of business. It focuses on developing a proper communication channel within the business for avoiding any confusion or disputes. Smooth flow of information among all stakeholders like employees, customers, suppliers and distribution enhance understanding which leads to create a better collaboration.
Disadvantages of Supply Chain Management
Expensive to implement
Major limitation of process of supply chain management is that it is quite expensive to implement. It requires large investment in terms of time, money and other resources that become unaffordable for small businesses.
Complicated
Process of supply chain management involves numerous complexities as it involves several departments within the organization. It may lead to create confusion and hamper the normal functioning of business. Employees may feel hesitant and demotivated to accept this concept as it is new to them thereby giving rise to several other difficulties.
Lack of co-ordination among departments
The concept of supply chain management functions properly only if there is better coordination among departments of departments. Establishing a coordination among several departments within big corporate is a quite difficult task where this concept may eventually fail to perform.
Requires trained and personalized staff
Supply chain management requires qualified and trained human resources for its effective executive within the company. Company need to incurs heavy expenses for acquiring such taskforce that is professional and highly skilled. Small companies may find it unfavorable for their implementation.
Lack of reliability
Supply chain management lacks of reliability as it is completely dependent upon the mode of information exchange among several departments. If there is any instance of inaccurate information sharing by any of the department, then it will have adverse effects on performance of whole supply chain.
