CASE STUDY

The Importance of Supply Chain Management in the Industrial Packaging Sector

Mar 11, 2021

What is supply chain management, and how it works?

Supply chain management helps brands tackle these challenges efficiently by actively managing all product flow, supply, product development, and more. Converting raw material into finished products is long, complex, and requires constant change, adaptation, and monitoring. As industries grow, supply chains become increasingly complex, and improving efficiency, growth rates, and customer satisfaction have been challenging for businesses. Supply chain management helps brands tackle these challenges efficiently by actively managing all product flow, supply, product development, and more. The process involves establishing central control across the production, development, distribution, and transportation of a product. By employing efficient supply chain management, companies can identify and mitigate challenges, reduce costs, improve speed-to-market, and increase customer satisfaction. A supply chain manager oversees the process of development, shipment, distribution, returns, and sourcing. Additionally, supply chain management addresses various tenets of the supply chain conducted outside the organization, such as sourcing of raw materials, relationships with suppliers and vendors, distribution of the completed product, and end-user satisfaction levels instead of the traditional approach to supply chains. This process helps companies track the flow of materials and products and information flow across various business units and with stakeholders.

Developing a competitive supply chain management strategy is crucial for companies to stay ahead in the market space. Connect with our experts by requesting service on our procurement platform to gain the latest insights into the importance of supply chain management best practices.

What are the five pillars of supply chain management?

Unrestricted Information Flow: Creating a robust and efficient supply chain requires in-depth organization and strong, data-driven strategies. Ensuring transparency and visibility across the supply chain is imperative to making effective decisions, keeping stakeholders informed, and developing mutually beneficial partnerships with vendors and suppliers. Supply chain management requires and promotes clear, strong, and constant communication to ensure coordination and mitigate significant challenges caused by lack of information. Suppliers, shippers, distributors, product developers, and all other internal business units must be aware of the factors, processes, and people impacting the product and their role through the supply chain.

Lifecycle Management: The process of turning raw materials into a finished product is complex and long-drawn, leading to illustrative management’s need from end-to-end. Coordinating with suppliers and vendors, assessing external and internal factors impacting contracts and supply chain processes, and transparency is imperative to ensuring efficient sourcing, production, shipment, and distribution. Many companies include suppliers in the process early, incorporate their ideas, and execute with combined efforts to achieve this. This also helps develop improved relationships with valuable suppliers and vendors and helps supply chain managers track their partners’ contribution, value, and performance through the process.

Performance Management: Identifying, evaluating, and partnering with the right vendors and suppliers is a complex process and requires in-depth research and constant monitoring. This step also involves clarity regarding a company’s business goals and key performance indicators (KPIs). Having those metrics clarified helps organizations evaluate suppliers’ and vendors’ performance and ensure all processes are carried out efficiently. With these insights, professionals can choose to renew, terminate, or change contracts with current suppliers and vendors. This pillar of supply chain management also involves assessing the performance of various other components of the supply chain process and executing novel strategies to ensure high-quality products, end-consumer satisfaction, and a resilient supply chain.

Compliance Management: Companies and governments stipulate certain essential processes and policies across the supply chain and various functions. Ensuring compliance with company policies and existing regulatory frameworks is imperative to an organization’s success and growth. Supply chain management involves assessing suppliers’ and vendors’ compliance with company policies, deadlines, goals, and targets. Additionally, businesses must ensure their production, shipment, distribution, and sourcing processes comply with regulations and abide by their contracts. Supply chain managers also aim to verify the prices provided and quality offered meet industry standards and performance measures stipulated by the government. This process helps companies identify valuable suppliers and replace partnerships that fail to meet company standards or comply with company policies.

Supplier Relationship Management: Supply chains are a complex set of procedures and require coordination, adherence, and transparency from all parties involved. Contracts developed with suppliers must have equal contributions, mutual benefits and address both parties’ needs. To ensure this, supplier relationship management encourages developing positive partnerships with vendors and attaching value to suppliers’ contributions to the organization. This pillar also involves evaluating suppliers’ performance, cultivating efficient dynamics, and formulating comprehensive strategies to ensure exemplary contributions, improved performance, and sustainable relationships. Fostering positive supplier relationships includes effective communication, data-driven supplier identification, and ensuring aligned business goals.

Creating an effective supply chain management strategy is essential for business to gain traction over competitors in the industry. Request for a FREE proposal to discover how you can conceptualize the five pillars of supply chain management to stay ahead from the competition.

What are the four components of supply chain management?

Integration: Ensuring that every party involved in a supply chain aims for the same end-goal and fulfillment of that product is crucial to maintain efficiency. All systems and processes require coordination, clarity, and resilience; the supply chain similarly requires conscious efforts to communicate across channels, mitigate confusion and misunderstandings, and develop robust strategies. Integration is an amalgamation of involved processes and participants into a single system. This also provides participants with the resources required to reduce error, stocking challenges, losses, and enables sufficient planning for potential risks. This supply chain management component significantly increases profitability, ensures satisfied end-consumers, fosters positive relationships with suppliers, and generates uniformity and understanding.

Procurement: A core element of supply chain management is the process of procurement. Through this process, companies identify partnerships, determine contracts or bids to purchase goods and services from external sources in business spending. Procurement and purchasing require comprehensive planning, in-depth research, and constant awareness regarding prices, industry standards, company goals and requirements, and supplier capability. To create the best end-product, businesses must acquire the ideal materials, resources, and tools. Failure to efficiently manage this supply chain management component can lead to shortages, delivery delays, or overbuying, essentially increasing unnecessary expenditure and causing losses for the company.

Operations: Supply chains are combinations of highly complex and differing processes. To ensure streamlined and efficient functioning across the organization, supply chain managers must address their operations, including all systems, processes, and structures in place. These processes aim to execute a smooth flow from suppliers to end-consumers. Scrutinizing operations is imperative to mitigate challenges and shortcomings and improve the organization’s speed and functionality. Constantly evaluating and monitoring all processes, equipment, and involved parties can reduce the probability of shortages, equipment failures, safety risks, and unsatisfied consumers. Inability to streamline and evaluate operations can lead to significant challenges for companies, including slow production and speed-to-market, unnecessary expenses, consequential losses, and customer attrition due to shortages.

Distribution: Transportation and shipping have transformed in recent years, with the advent of varying delivery systems, multiple digital platforms, and omnichannel services from retailers, stores, and businesses of varying kinds. Shipment, delivery, and return of goods are essential components of the supply chain that require significant investment and continuous improvement. For this process, centralizing a system and maintaining a real-time tracker is crucial to avoid losses, unsatisfied consumers, and transportation or scheduling challenges. With omnichannel sales, it is imperative to track online and offline purchases on a singular system to reduce the chance of shortages, over-ordering, or other inventory challenges.

Success Story

Supply chain management helps companies address potential and current challenges within the organization, tackle risks caused by external factors, prepare for constant changes, and reduce costs substantially. For this reason, an industrial packaging sector player partnered with SpendEdge to leverage our expertise in offering supply chain management solutions. With our detailed insights and comprehensive recommendations, the client successfully identified and strengthened valuable supplier relationships and reduced unnecessary expenditure caused by non-compliant or non-performing partnerships. Additionally, the industrial packaging firm addressed various significant challenges within their supply chain and developed detailed strategies to increase speed-to-market, improve the quality of their products, and mitigate significant risks in the growing packaging sector. SpendEdge helps companies realize substantial savings, terminate non-performing sectors and contracts, develop strong supplier relationships, and enhance customer satisfaction rates significantly.

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