What you need to know:
An efficient supply chain identifies and mitigates potential disruptions or bottlenecks that could impact on your business.
During a recent interview with NTV, I spoke about the need for agribusinesses to optimise their supply chains to be competitive. Several people have reached out on how supply chain optimisation can improve profitability for a business entity.
Supply chain refers to the entire process of how goods and services are delivered to customers, starting from the raw material sourcing, production, distribution, and finally reaching the end consumer. A well-functioning supply chain ensures the smooth flow of materials, information, and resources from suppliers to manufacturers, through distributors, retailers, and to the end user.
Without an efficient supply chain, businesses would struggle to meet customer demands. A poorly functioning supply chain leads to higher costs, and low customer satisfaction. In the end, that impacts on the competitiveness of the business in the marketplace. A well-managed supply chain is crucial for businesses to plan and execute their operations, maintain product quality and availability, reduce costs, minimise risks, and improve customer satisfaction.
For a business, its supply chain is its bloodline as it helps to streamline operations and support planning, to ensure a seamless flow of materials, information, and resources. A business relies on its supply chains to meet customer demands and expectations, manage inventory levels and reduce stock-outs or excess inventory.
An efficient supply chain identifies and mitigates potential disruptions or bottlenecks that could impact on overall business efficiency thereby impacting productivity and profitability. In a nutshell, an efficient supply chain enhances a business’ competitive advantage in the market by providing better product quality, faster delivery times, and superior customer service.
A simple example of a supply chain is that of a miller who sources grains, turns it into flour (posho) and distributes the flour/posho to wholesalers, supermarkets and retailers so that consumers of posho can access the products. The supply chain starts with either the farmers or grain aggregators where the miller buys the grains from and the storage and transportation facilities that are used to store and then deliver the grains to the milling plant.
Once the grain is milled into flour, it is stored or immediately transported to wholesalers, retailers or supermarkets. In some instances, millers may have regional warehouses where the products are held awaiting orders from retailers. At the retail point, the flour/posho must be at an accessible point from where the customer can pay for the product.
The whole process and facilities from the milling plant until the point where the customer accesses the product are all part of the supply chain.
Like in any management practice, supply chain management involves strategic planning that incorporates a clear understanding of the overall business objective/goal and aligning all the processes to achieve that goal.
It implies that all aspects of procurement, production, transportation, distribution, and customer service must be thought through thoroughly to inform how the supply chain should be organised. Supply chain management involves the coordination and integration of various activities and stakeholders to ensure the efficient flow of goods and services from suppliers to customers.
A well-managed supply chain ensures that products are available in the right place, at the right time, and in the right quantity. This not only improves customer satisfaction but also minimises inventory holding costs and reduces the risk of stock-outs or overstocking.
By streamlining processes, coordinating activities, and integrating suppliers, manufacturers, distributors, and retailers, a well-functioning supply chain helps businesses operate more efficiently and effectively, resulting in improved profitability and competitive advantage.
A successful supply chain hinges on effective communication, collaboration, and coordination between all parties involved, including suppliers, manufacturers, distributors, retailers, and customers. These key elements ensure that information and resources flow smoothly throughout the supply chain, allowing for timely decision-making, efficient production processes, accurate inventory management, and efficient use of transportation and distribution activities.
Collins Apuoyo is a sustainability enthusiast & social entrepreneur.