Running head: Is it possible for an organization to reduce its operational costs through an effective

supply chain management? 1

Is it possible for an organization to reduce its operational costs through an effective supply chain
management?

Lazarus Barse
Is it possible for an organization to reduce its operational costs through an effective supply chain
management? 2

What Is Supply Chain Management (SCM)?

The transformation of raw material in to final products through tightly managed processes of flow of
goods and services through actively streamlining of supply side of activities to gain competitor advantage
and create customer value is called supply chain management. Every effort is made by all involved in the
chain of supply to make it efficient and economical. The entire gambit covers production, product
development and the information system needed.

How Supply Chain Management Works?

SMC, controls or link the production, shipment and distribution of product. The companies are able to
deliver the products faster to the consumer by cutting excess costs through proper supply chain
management. This is achieved through proper management of internal inventories, production,
distribution and sales. It also attempts to streamline the inventories of the company vendors.

Of recent, many companies have started paying attention to the value addition to properly managed
supply chain.

After facing the challenge of the great depression by the supply chain industry another challenge awaited
it in the form of smart phones. It worked like a market place disrupter with exponential growth consumer
base and easy access to goods and information.

Changing the face of SCM

All of these changes in the marketplace meant that supply chains had been disrupted forever. The face of
the supply chain was not same anymore, awaiting drastic response from the supply chain professional.

Company leaders did what they could to adapt. Theyi prioritized iprojects ithat 1reduced iinventory
and ilogistics iexpenses.i Although ithis ihelped imatters in the short term, iprofessionals iriskedi ignoring
the ilong-term idemand-driven ivision of the ibusiness ioperating imodel. iOrganizations iprepared for the
irebound while iresponding to the iconditions of the new normal: a ireduced labor pool, ianalytics-based
idemand iinsights, istagflation and ideflation, issues isurrounding ienergy and isustainability, and a
burgeoning omni ichannel imarketplace. iEffective istrategies iicoupled with a well-defined plan and the
right tools helped supply chain iprofessionals ialleviate ifulfillment pressures and ireadied imanagers for
market changes in the future.

You don’t need to be a corporate giant to save big on supply chain costs. These seven areas offer
significant savings opportunities for companies of all sizes and across all industries

The ability to predict right, use the available tools to plan contingencies will ensure that the company is
able to eliminate or minimize risks, like suppliers going bust, political turmoil and act of God, which in
turn affects manufacturing. Company is able to address demand, promotional strategies pricing, growth
and addition of new products in timely manner.
Is it possible for an organization to reduce its operational costs through an effective supply chain
management? 3

Once professionals are able to better understand and shape demand and risk, they need to align their
supply chains to changing market opportunities and events. Companies must deploy dynamic planning
capabilities and continually fine-tune operations to ensure responsive agility to meet changing demand.

Right cost, place and time product manufacturing holds the secret of success. The success of the product
depends on the decisions made in the early cycles of product development. Designs must be optimized for
supply, manufacturability, and supply chain operations.

Profits for your company can rocket upward if you achieve sufficient savings in supply chain costs. It's
not uncommon for a concerted effort to yield annual savings depending on the size of the company.

Example of SCM

Understanding the importance of SCM to its business, Walgreens Boots Alliance Inc. placed focused
effort on transforming its supply chain in 2016. The company operates one of the largest pharmacy chains
in the United States and needs to efficiently manage and revise its supply chain so it stays ahead of the
changing trends and continues to add value to its bottom line.

As of July 5, 2016, Walgreens has invested in the technology portion of its supply chain. It implemented a
forward-looking SCM that synthesizes relevant data and uses analytics to forecast customer purchase
behavior, and then it works its way back up the supply chain to meet that expected demand. For example,
the company can anticipate flu patterns, which allow it to accurately forecast needed inventory for over-
the-counter flu remedies, creating an efficient supply chain with little waste. Using this SCM, the
company can reduce excess inventory and all of the inventories' associated costs, such as the cost of
warehousing and transportation.

https://www.supplychainquarterly.com/topics/Strategy/scq201102seven/

https://www.supplychainquarterly.com/topics/Strategy/scq201102seven/