Supply chain management is the production and distribution process from the time raw materials are procured to the delivery of goods to consumers. So far, supply chain management has played a major role in a lot of companies to enhance the competitive advantage, cost-effective control as well as bring satisfaction to customers. In this article, we will share with you 7 key principles in Supply Chain Management to help manage the supply chain efficiently.
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7 key principles in Supply Chain Management
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1. Customer-based segment of demand
2. Personalize Logistics Network
3. Listen to the signals of market demand in order to plan accordingly
4. Ability to react with the signs of the market
5. Strategically search for supplies
6. Development of information technology application strategy throughout the supply chain
7. Apply effective measurement systems to multiple channels
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Principle 1: Customer segmentation based on demand
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Customer segmentation based on demand is necessary because not every customer is capable to pay or has the same need. On-demand segment of customers requires businesses to research customer needs, analyse each segment’s profitability, calculate costs, benefit and develop specialized services in each segment, and apply supply chain management to cater for each effective segment.
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Principle 2: Personalize the Logistics network
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In this principle, effectively customizing the logistics network will help to meet the requirements of the service as well as the profit target. Enterprises need to complete the process of completing orders from the time of receipt of the customer request to collect the money.
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Principle 3: Listen to the market signs to plan accordingly
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For the management to achieve efficiency requires the participants to be proactive in observing, updating the information, analyzing, making forecasts on the needs of the market and customers to make adjustments to help minimize the risk of overstocking, reduce inventory, limit the shortage of goods and deliver goods to meet customer needs in a timely manner. The sharing of information between the manufacturer, distributor and supplier is very important in making the decision to adjust.
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Principle 4: Ability to react with the signs of the market
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The manufacturer needs to improve its ability to react with the signs of the market by constantly improving and innovating its products. However, improvements need to be focused on the needs of customers. If ENTERPRISES delay in distribution, customization, and product differences, the supply chain of the business will retain many inventories. Besides, attention should be paid to the availability time of products to meet the needs of customers as well as the corresponding changes necessary in materials and production process.
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Principle 5: Finding and managing effective supplies to reduce total cost of ingredients and services.
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Finding suppliers and managing supply efficiently helps businesses minimize the cost of raw materials, finished products as well as service thereby increasing the competitive advantage of ENTERPRISES, sale price of finished products, increase profits. Therefore, companies should consider their approach to suppliers.
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Principle 6: Developing the application of technology across the entire supply chain
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The application of technology in supply chain management is essential to help managers get a panoramic view of supply chains, cargo flow, product information,… thereby making appropriate adjustments and decisions.
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Effective supply chain management software provides features such as planning materials, materials; managing contracts for the purchase/lease of supplies and payment of debts; manage price list, supplier quotation; management of suppliers as well as many other business operations in supply chain management. Besides, when applying the software, you will not have to worry about how to manage the supply chain when there is involvement of too many objects or problems of complex projects. With software, information will always be transmitted quickly and improve transparency and visibility.
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Principle 7: Building and applying effective measurement systems across multiple channels
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The application of an effective evaluation system is essential in reviewing and improving the efficiency of supply chain governance. You need to evaluate based on multiple criteria, factors.
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Effective use of these 7 key principles in Supply Chain Management will help enterprises manage supply chains efficiently, increase customer satisfaction as well as the competitiveness of enterprises.
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