The prime goal of Supply chain management is to reduce operating costs. The help of proper design of the supply chain reduces the cost of procurement, production, and delivery. Reduction in supply chain operating costs brings higher efficiency and increases the profitability of the organisations.
(i) Effective Distribution: Physical distribution of products is a challenging task in supply Chain Management. Supply Chain managers ensure the coordination of warehouse operation and logistics channels for attaining the goods reach the right customers at the right location within the time limit.
(ii) Coordination with Supply Chain Partners: Proper coordination and transparency are essential among all the supply chain partners. Supply chain partners like suppliers, manufacturers, wholesalers, retailers, distributors, and
customers.
(iii) Inventory Management: Inventory such as raw materials, semi-finished products, spare parts, and finished goods are to be maintained at an optimum level for smooth functioning of supply chain operations. Supply chain managers must maintain the right stock levels at all times in order to avoid overstock and non-availability of inventory situations. They have to control the inventory cost.
(iv) Supplier Relationship Management: Supply chain management functions towards strengthening the relationship with key suppliers. One of the goals of the relationship with suppliers is to enhance product development, market positioning, and competitive advantage for the company. The closer ties between the buyers and suppliers should be transparent and effective interaction is required for the long-term purpose. For example, Toyota has extended positive relationships with potential suppliers to encourage sharing knowledge and to enhance organisational performance.
