Significance of a Supply Chain in an Organization

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Introduction

Due to the ever-growing number of purchasers, there is an increase in demand for consumer products, requiring more competitiveness in the markets. For an organization to remain in the competitive in the market, there is a need to manufacture high-quality products at an affordable price to maintain customer interest. Therefore, organizations have to ensure a cost-effective system of operation that meets consumer demand while reducing the cost of production and supply 1. An efficient supply chain is one of the systems that maximizes the companies’ input while sustaining consumer value and product competitiveness. This essay aims to discuss supply chain management while outlining its importance in determining both product cost and quality of production for efficient manufacturing of goods and market competition.

Literature Review

A supply chain involves manufacturing an item from the raw materials, distributing the finished merchandise in the target market, and then providing the after-sale support services. Thus, these activities include purchasing raw materials, monitoring the production process for quality services, storing materials, and allocating the final goods. Supply chains use product cost, quality, and consumer feedback to compete in today’s dynamic market trends. A supply chain is responsible for the value of the produce through quality control procedures that guarantee the required standards according to local, global, and company’s preferred principles 2. For example, mobile phone products must adhere to international technological principles, but particular firms such as Apple have specific criteria that make their merchandise unique to compete with other corporations. The quality of a product determines both its manufacturing and the final costs. Hence supply chain ensures the business operates smoothly through production, distribution, and research on target markets.

Timely delivery improves an organization’s credibility and end user trust, thus, helping a supply chain to compete effectively. Once a business guarantees its credibility, the supply chain can establish the cost of a particular product considering the customers’ trust in its efficiency to deliver according to value and time sensitivity1. Finally, consumer feedback enables the supply chain to research client preferences, after-sale services, and general product reviews, determining the quality and price of future finished goods. A supply chain integrates all these factors to ensure the market demands are met while maintaining the economic stability of an organization.

Significance of Supply Chain to the Product Cost

Supply chains reduce the manufacturer’s cost of production by ensuring a steady movement of raw materials. Most companies depend on supply chain management to deliver the required material to their factories, which minimizes the cost of transport and it also allows for timely delivery of the resources for continuous operations 3. After processing, the goods are disseminated to various destinations at a cost-effective budget. Therefore, the supply of raw materials and dispersal of finished goods creates an uninterrupted flow of the company’s operation promoting competitiveness and economic stability.

Moreover, an adequate supply chain enables a company or business to be more efficient by meeting deadlines and consumer specifications using minimal expenses. Supply chains determine the target market through surveying consumer product preferences and affordability which helps wholesalers and retailers to know their niche market 4. Hence, when supply equals demand, goods are less likely to overstay in stores creating efficacy in delivery and sales.

Importance of Supply Chain Management in Quality Production

A supply chain is essential in ensuring the excellence of products through quality control inspections from manufacturing to the distribution process. Effective quality control ensures minimal defects and unnecessary wastage of raw materials 5. Organizations experiencing large amounts of merchandise with defects suffer greater losses and employ manual resources to inspect goods, raising the operation expenditures 3. A well-organized supply chain management guarantees lesser operational expenses in manufacturing by creating the best quality product control system in the entire process 3. Apart from minimizing product defects and raw material wastage, supply chain management also determines the durability and reliability in performing its functions 6. Better quality products are more durable than inferior ones, which wear out before the given warranty period expires. If there are any breakages before the expiry dates, clients are less likely to respect and purchase from the same corporation leading to failures and minimal profits. Therefore, an efficient supply chain maintains the company’s reputation and sales returns due to reduced risk of consumers returning broken goods.

Conclusion

In conclusion, the supply chain greatly affects the overall performance of an organization by controlling the operational expenses and cost of the final product. A supply chain is essential in providing standard consumer goods which uphold customer value, since there exists a widespread global production of similar products in the market. The supply chain also ensures the smooth running of the business through timely delivery of raw materials and distribution of the final product allowing clients to get quality products at affordable cost without any delays. Well-timed distributions increase the company’s credibility and integrity, leading to more sales and profits. Thus, this clearly indicates that supply chain management is the core of any organization’s financial determinant.

References

Ali Z, Gongbing B, Mehreen A. Predicting supply chain effectiveness through supply chain finance: Evidence from small and medium enterprises. International Journal of Logistics Management [Internet]. 2019; 30(2): 488-505. Web.

Hussain M, Khan M, Ajmal M, Khan B A. Supply chain quality management and organizational performance: empirical evidence from the telecom industry in the UAE. Benchmarking [Internet]. 2020; 27(1): 232-249. Web.

Kaswengi J, Lambey-Checchin C. How logistics service quality and product quality matter in the retailer–customer relationship of food drive-throughs: The role of perceived convenience. International Journal of Physical Distribution & Logistics Management [Internet]. 2020; 50(5): 535-555. Web.

Jacobs E, Mafini C. Transactional leadership, supply chain quality and business performance in the fast-moving consumer goods industry. Journal of Transport and Supply Chain Management [Internet]. 2019; 13. Web.

Meng J, Yan J, Xue B, Fu J, He N. Reducing construction material cost by optimizing buy-in decision that accounts for the flexibility of non-critical activities. Engineering, Construction and Architectural Management [Internet]. 2018; 25(8): 1092-1108. Web.

Nikolicic S, Kilibarda M, Maslaric M, Mircetic D, Bojic S. Reducing Food Waste in the Retail Supply Chains by Improving Efficiency of Logistics Operations. Sustainability [Internet]. 2021; 13(12): 6511. Web.

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"Significance of a Supply Chain in an Organization." BusinessEssay, 5 Jan. 2023, business-essay.com/significance-of-a-supply-chain-in-an-organization/.

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BusinessEssay. (2023) 'Significance of a Supply Chain in an Organization'. 5 January.

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BusinessEssay. 2023. "Significance of a Supply Chain in an Organization." January 5, 2023. https://business-essay.com/significance-of-a-supply-chain-in-an-organization/.

1. BusinessEssay. "Significance of a Supply Chain in an Organization." January 5, 2023. https://business-essay.com/significance-of-a-supply-chain-in-an-organization/.


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BusinessEssay. "Significance of a Supply Chain in an Organization." January 5, 2023. https://business-essay.com/significance-of-a-supply-chain-in-an-organization/.