Supply chain efficiency can lead to bottom line success. That’s the short answer.
To understand this better, we need to figure out all about ‘following the money’. It may apply to the supply chain and freight transportation sectors very well. The freight is where the money is. That is the truth.
The influence of the supply chain on company value can be measured through speed to market. The faster products get to the market, the more full-price sales there are. This makes sense with shippers who are at the mercy of carriers. The engine that drives speed to market is effective supply chain management. If you bring a product to the market before your peer does, you win. When you introduce something in the market, you dictate prices. You build your brand further. You are novel. You have an edge over the others. Your competitor can come back with more. But you have set the trend. And that matters. So, it is very important to reduce the time from the idea phase to the release phase. Supply chain plays a very important role here.
In manufacturing and retail environments, supply chain ranks on top for a company’s cost of a product. What’s more? While other major costs are fixed, SCM costs are fluctuating. People tend to think that is somewhere they can drive gross margins. That’s where SCM efficiency impacts the bottom line. Apart from this, another area where SC can boost bottom line is brand protection. Nothing good happens when you touch products, say experts. When products are touched, costs are added, the product is slowed down, and the chances of it being broken increase. With every incremental touch, the product is slowed down. With every delay, there is a negative impact on bottom line.
Mode of transportation is very important in SCM. While flight carriers speed up the process, the costs become quite high. So, one has to strike the right balance between time and costs with respect to transportation in SCM. There is very careful analysis on the fast plane and the slow boat; you need to figure out where your supply chain fits. Interestingly, the best answer changes with every scenario. Global, macroeconomic issues, currency fluctuations, geopolitical things, and the costs of real estate and fuel are some of the things that govern such decisions. So, that is the long answer to the question on whether supply chain efficiency impacts bottom line!
