Supply chain management seems important, but what exactly is it? This is a great issue that which all successful entrepreneurs need an answer to. Simply put, it’s the method by which a company gets its product or service to the market.
You’ve got an amazing concept for a product, and you’ve found the money to bring your idea to reality. You’ve even designed an advertisement campaign to promote your item to people around the globe. That’s it. The work is done, and you’re now free to sit back and watch the money begin to come in. Well, not quite. Your product isn’t a success until you deliver it to the customer at a cost that is sensible. This is when the management of supply chains becomes crucial to the success of your product.
Suppliers
All it takes is your suppliers. In order to create the top widget at the highest profit, you require a sufficient supply of materials to be accessible at a cost that is within your financial budget. The suppliers supply you with the essential materials you make the most popular widget.
A company could, if it chooses, be its own supplier of raw materials. In the majority of cases in this scenario, the cost would be prohibitive. The mining of raw materials is typically an expensive, labor-intensive venture.
For instance, to create tablet computers (finished final product), you will require crude oil in order to create plastic granulation. This granulate is then used to make the body made of plastic for the device. But, as a producer of tablet computers, you have no need for the massive quantities of crude oil that must be extracted for a business to make a profit. Furthermore, as a producer of tablet computers, you’ve no desire to be in this kind of business. That’s why there are suppliers. They will supply you with the necessary raw materials to make your final product. If they are able to offer it at a price that is reasonable, everyone is a winner.
Production Process
That’s where we step in. You’ve found a great collection of suppliers that can provide you with the necessary raw materials to build your widget for the price you can afford. You’ve got the funds in place for the development of your product, and you’ve got the raw materials required to bring your vision into possibility.
It is the next stage to set your production plan into motion. You design an assembly method and produce widgets in a short time. The whole thing seems great! Now, the earnings must begin to accrue! However, not yet. There is still a need to bring the product you’ve created to market. The location of your market in relation to the production facilities will be a significant factor in how you reach it.
Shipping
For many entrepreneurs, this is the place they are lost. How do I get my product the be sold? There are numerous ways of accomplishing this, and as previously mentioned, this will depend on where your target market is. There are several options available air, ocean, rail, road, and air.
For instance, if my target market is located within Asia and my company is somewhere in North America, I will need to utilize air or ocean shipping to complete my chain of supply. If my primary customer is located in North America, I will depend on road, rail, or air. What I choose to do is best for me will be based on many factors, not least of them the cost and the time, and sensitivity.
If my client requires me to expedite the shipping process, I may be asked to consider air shipping even though the expenses could be more costly. These higher costs are transferred to the customer through more expensive costs. If, however, my client isn’t in a rush to get their order delivered and is willing to endure a long wait time for the product in exchange for a decrease in cost. In this scenario, I might opt to deliver the item via the road. This type of transport is usually less expensive than shipping via air.
Transporting goods by rail could be less expensive, particularly when dealing with large quantities of items. Businesses in the rail industry are able to benefit from the economies of scale. Rail cars travel along predefined tracks, which reduce friction and increase environmental efficiency. This means that one locomotive is able to carry an enormous amount of rail cars. If your client isn’t in a rush, it could result in significant savings for both of them using this method of shipping. But, this method isn’t flexible and might not be able to deliver service directly to your customer’s door.
The road-based shipping method is the most commonly used shipping method. This method allows for relatively quick delivery of products to markets, and it is flexible enough to be able to get to most places in a single trip. Certain companies have their own fleets. However, the majority of companies find it economical to employ haulage companies to handle this service on their behalf. It’s cheaper than air and, while somewhat more costly than rail travel, is an acceptable compromise when speed and speed are considered in the selection process.
In actuality, you might have to utilize a mix of shipping options to bring your product onto the market. This cost to you has to figure into the price of the product in order for the company to survive. Recalling our original remarks, Supply chain management is vital for an effective company. Knowing how to manage this process isn’t simple, but entrepreneurs should have a good grasp of the procedure. If you can master this, then you’ll be well on the road to success!