5 Ways Supply Chain Management Can Improve a Company's Financial Statements. Updated.
Updated: Dec 19, 2019
Highly optimized and well-versed supply chain management companies attain the capacity to streamline technical adaptations and manage extreme complexities within the varying sectors woven through international trade and logistics.
Supply chain management companies exist to control the chaos - to create specific procedural events based on a meticulous timeline all within a synchronized network of transportation units. Add to this a cumulative reduction of operating costs with inclusive financial improvement and the need for an efficient SCM (Supply Chain Management) sector goes from generalized theory to outright necessity, overnight.
Reduced Purchasing Costs
Retail companies rely heavily on their supply chains to efficiently and quickly deliver products to customers to evade expensive holding fees in respective warehouses.
Outsourcing your supply chain to be managed by a 3PL or ITM team will allow for streamlined procedures, wasteful spend elimination, consistent improvements and optimization, and the added service offering of Just in Time (JIT) inventory management.
These services all collectively merge to reduce overhead and costly endeavors at every turn.
Overall Production Costs Decreased
Production shutdown can accumulate upwards of $20,000 per minute and millions of dollars each day in lost profits. To combat this, manufacturers trust the authority of supply chains to deliver parts to affiliated plants for assembly in a timely manner.
We’ve previously covered expedited freight and specifically, AOG shipments in another post. If you’re at all interested in the logistics and strategic planning involved in aviation maintenance and their respective manufacturers and suppliers, check that article out here.
Decreased Supply Chain Costs
Supply chain management companies are employed to ascertain the most streamlined and cost-effective logistical map possible.
“For example, Dell’s revolutionary computer supply chain approach involved making each computer based on a specific customer order, then shipping the computer directly to the customer. As a result, Dell was able to avoid having large computer inventories sitting in warehouses and retail stores which saved millions of dollars. Also, Dell avoided carrying computer inventories that could become technologically obsolete. [CSCMP, Council of Supply Chain Management Professionals via The Importance of Supply Chain Management]
Products delivered to customers in an expedited manner yields an immediate increase in cash flow. If the product delivers sooner than expected, the invoice can be issued sooner.
An optimized supply chain can be linearly linked to cash flow improvement. If cash is king, then supply chain optimization is “king-er”.
The good news is there are unlimited options where supply chains can be managed in such a way that heightened efficiency results in higher profit margins compounded with mitigated and limited risks resulting in hefty fines.
Profit Leverage Wiggle Room
Companies that work with supply chain management sectors have the ability to negotiate terms and contract rates. Agreements based on a year’s worth of business data often times allows for decreased rates across the board, thus increasing budget elsewhere and gross profit.
Last week we spotlighted the primary benefits of outsourcing your entire logistics department to a qualified team of International Transportation Management experts. What we highlighted here encompasses the monetary theory that comes from comprehensively valuating a supply chain management partnership.
If you missed our previous article on logistics outsourcing, check it out here.
Top supply chain management companies have the immediate ability to alter the logistical overview of your entire supply chain by streamlining efficiency in day-to-day transactions and avoiding unwarranted fees and non-compliant penalties with strategic planning.
If you have any questions regarding supply chain management or how to efficiently increase the productivity of your current supply chain, reach out to us today for more information. We would be happy to have a conversation with you.
Our clients understand the value of the logistics process. They know that supply chains, not businesses, compete. We work with leading companies to build their strategic advantage by offering a complete range of end-to-end logistics services customized and tailored to meet the specific requirements of our clients. Our Single Source Global Management System provides the structure and support to drive industry leading performance and results from each of our service areas.
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