The Importance of Supply Chain Management to your Business

“ The importance of Supply Chain Management and What is ‘supply chain management?” – that is a question we often hear. Our Supply Chain Management Services team at MBG Corporate Services answers this briefly in this piece.

The term ‘Supply Chain Management' was first coined in 1982. Since then, with the expansion of the world economy, advancements in technology, and the ever-growing globalized interconnectedness between economic activities and players, the supply chain management process has grown in stature and importance to become an integral part of the backbone of economies and businesses.

So, what is supply chain management and why is it important?

What is Supply Chain Management and Why is it Important?

Supply chain management (SCM) is the management of the flow of goods and services between business entities and locations. Why is supply chain management important?

Put in historical perspective, business and economic activities have always been interconnected between various players involved – buyer, seller, transporter, and so on – but in modern times, that ‘supply chain’ network has expanded in size and complexity. This has necessitated the need to actively manage the process as a separate discipline. The importance of supply chain management has grown with the ever-increasing complexity of these networks and in their interconnectedness

The supply chain management process includes the management of movement in both:

• Goods: The movement of raw materials, work-in-process inventory, and finished goods. A good example of supply chain management is the typical order fulfillment process today, from production in the factory to consumption by the end consumer. This involves managing a host of places, processes, and players – manufacturer, wholesaler, warehouser, retailer, and customer service linked via transport, storage, IT, marketing, and other support services.
• Services and Financial and Information flow: While material goods are the most tangible type of SCM, it also applies to services and other non-physical forms. An example of supply chain management in services would be a boutique marketing company with an array of players and disciplines outsourced across various locations for its output – research, design, production, IT, analytics, etc. Financial flows relate to expenditures and receipts of cash streams. Information flows pertain to areas such as demand information, inventory status, and order fulfillment.

These non-goods components of supply chains are equally, if not more, important in the Services-driven world of 21st-century business where both the physical and non-physical chains are so strongly intertwined. The corresponding complexities of supply chain networks explain why is supply chain management important to the modern economic and business structure and why the demand for supply chain management services has grown so rapidly. Systems are only as strong as their weakest link and a breakdown in even the smallest link in the chain can have a disproportionate impact.

In fact, many characteristics of the modern era such as the falling cost of connectivity, greater international trade liberalization,  the growth of specialized geo-clusters, and the emergence and rise of the ‘agile’ / ‘lean and mean’ business philosophy, among others make outsourcing and other translocation and trans-entity activities a financial and strategic imperative. The result is an expansion of the supply chain in terms of both size and complexity.

The importance of supply chain management especially came to the forefront in 2020-21 (and continues) with the Covid-19 pandemic. Both governments and businesses had to deploy the supply chain management process effectively to manage crucial activities, be it on medical supplies, essential items, or business operations. It is another great example of supply chain management in that it also demonstrated the importance of risk mitigation in the supply chain management process.

The importance of supply chain management lies in its drawing from a variety of related disciplines from engineering to marketing and finance to solve supply chain problems. The supply chain management process as an organizational function and supply chain management services both must be adept at understanding the intricacies of all the various components and functions in the supply chain.

Winning with MBG’s Supply Chain Management Services  

With a best-in-class team that understands the supply chains of our client's businesses and the risks inherent in them, at MBG Corporate Services, we help clients to reduce or even eliminate  the impact of  disruption or chances of disruption with a range of supply chain management services:

Supply Chain Risk Assessment: Identification and evaluation of the nature and extent of third-party risks of vendors vis-à-vis their third-party relationships with other service providers

Business Health Check Review on Financial and Operational Costs: Efficient supply chain risk assessment, business models, and process innovations for continual improvements to profitability.

Drafting or Revisiting Entity and Process Control Documentation: Chain breakdowns can happen with improper mapping documentation. Our reviews ensure these are updated, current and comprehensive.

Drafting of Negotiation Terms with Vendors and Customers: We draft the terms of negotiations with vendors most suited and specific to your business.

Impact Assessment of Claims from Vendor/Customer: Bespoke end-to-end solutions, strategic advice, or single-issue support on various supplier and third-party risk assessment and mitigation.

Computation of Loss/Damages: Immediate and in-depth assessment of losses with a view to both immediate resolution and long-term prevention planning for the future.

If you want to talk with our experienced Risk Advisory Services domain experts at MBG Corporate Services can help you through the entire Supply Chain Management Process. Contact us to know more.

Our Supply Chain Management Service Deck:- Supply chain management services