Your company’s supply chain is one of its most essential components and without a well-managed and efficient supply chain, your business can run into many problems with production and procurement. Supply and Operation Planning S&OP allows you to track various key factors in the supply chain process such as supply and demand, allowing you to more accurately predict business needs. Once a Supply and Operation Planning system is in place, your company will improve its production in many key areas.
Six Advantages Careful Supply Chain Management Provides
- Complete orders without issues with timing and stock. Companies without effective supply chain management can often run into issues fulfilling their orders. These issues can be a lack of stock or simple issues with shipping times. By having an efficient system in place, you’ll have the stock you need and the ability to meet prompt shipping times. This improves your reputation and customer relations.
- Better forecasting predictions. With an S&OP system in place, you can carefully plan for the future with more confidence and exact figures. Without such a system, your forecasting data will be incomplete and any resulting forecasting will lack the accuracy you need for it to be successfully implemented.
- Discover problems quickly and respond accordingly. An advantage of carefully monitoring your supply chain is that you quickly become aware of any potential issues both external and internal. Often, undetected issues can become far larger problems because you do not become aware of them until they become far more severe and noticeable. Catching a problem early can prevent loss and reduce costs to address the issue.
- Improve supplier reliability. Your supply chain will likely involve several third-party suppliers to address specific business needs for raw materials and resources. Knowing your current material needs and being able to adjust as needed allows you to make adjustments to orders with your suppliers, making things more efficient. This also increases reliability due to avoiding supply bottlenecks and waiting for important orders.
- Reduce costs. A key issue with mismanaged supply chains is the inefficiency can also drive up costs. These increased costs can come from several areas. These can include wasted materials, overpaying for shipping, buying more than you need, buying less than you need, leading to emergency buying which can carry increased costs, and other such issues.
- Avoid material shortages. Running out of essential materials can be highly damaging to your company’s bottom line. Without the needed materials, work can come to a complete halt as you simply cannot produce more finished products. This can cause you to miss orders, send out orders late, and lose days of production, leading to further lost profit. With a robust S&OP, such supply issues can be avoided.
Tracking your supply chain needs requires a good deal of effort, buy-in from various departments, and it can take time to establish an efficient and accessible system. However, this investment of time, money, and effort is well worth it as it makes your company more nimble, efficient, responsive, can reduce overhead, and, in general, can reduce costs.
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