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How The Supply Chain Can Impact The Company's Finances

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How The Supply Chain Can Impact The Company's Finances

Supply Chain is the management of the flow of goods from suppliers (supplier) that supplies goods to your needs or deliver your goods up to your customers. If you do not manage the supply chain (or purchase, procurement, planning, warehousing, logistics, procurement, customer fulfillment, operation, import, export, or buyer) in your company well, then your company's supply chain will spend the money and time of your company.

Department of Marketing, Sales, research and development, engineering, finance, quality, accounting all must understand the supply chain. What is the supply chain? How does it affect your work? And what can you do to optimize your function relationship with the supply chain?

Please read the following article to get the answer.

As I've said above, at its most widespread definition, the supply chain is the management of the flow of goods from suppliers supplying your suppliers through to your customers.

The optimal and successful supply chain is "Get your customers what they want, when they need it and spend a little amount of money reaching it. " Optimizing the supply chain is what we must do to become a professional supply chain. And to do that, we have to touch many other functions within the company.

Your business function that can use Supply Chain

1. Fulfillment of customer needs

Who is your customer? Maybe it is a very simple question, is not it? Your sales team may tell you that your customer is a distributor or retailer selling your stuff. Your marketing, product development, and customer service teams may tell you that your customers are the consumers who use your goods (i.e. they buy from your distributor or retailer). The point is there are nuances to every aspect of the business. And the same is also true in the supply chain. Customer fulfillment is slightly different from customer service, which may or may not be the same as the salesperson within the company.

In some companies, the fulfillment of customer needs is not part of the supply chain, but in many small to medium enterprises, it is part of the supply chain. So how does this supply chain aspect impact the company?

If you are in a sales team, delivering goods to the customer on time can mean the difference between making a sales goal or not. If you're on a financial team, you can also track your revenue and also track costs. Will your Supply Chain team fulfill the delivery objectives promptly, but by taking the express delivery option so that it adds to the cost? Or by carrying more inventory than you counted? The most important part of the optimal supply chain is spending the least amount of money to reach the destination on-time delivery.

2. Inventory Or Logistics

How many supplies in your supply chain system? Where? On the offshore sea? At 3PL? And why is it important? If you are on a financial team, then you have to pay to keep that inventory. And you will continue to pay for that inventory with insurance, warehousing, and other supplies which all of these require cost. 

If you are in a team of quality control, you should check all the inventory (or will) or need to understand the priorities, so that you know which one should be checked first. If you're in the accounting team, you've got a list that tells you about the inventory in your company book. Does your supply chain team agree with your list? When was the last time you did a counting cycle or did the physical inventory calculations? If you are on a sales team, is what you plan to sell next month, is it already in stock or inbound?

3. Production Planning Or Manufacturing

The supply chain will bring your raw materials and components needed for the production process and stored in the warehouse. If you are on an Engineering team, is production planning already in line with the specifications and processes you have made? 

If you are a manufacturing company, is production planning in line with your capacity? Are the required raw materials available? If you are a team of quality control, do you know what items come and most importantly to check in advance? If you're on a sales team, is production planning already aligned with your sales plan? If you're in the accounting team, are all the things that are in WIP (work in process) is part of the production planning next month?

4. Sourcing Or Purchasing

The supply chain allows you to get the source of your products from the most qualified suppliers or the lowest cost. They process the purchase order and deliver the product you ordered to your warehouse. If you're a research and development team, are they the suppliers you want when you're new to your product? 

If you are a marketing team, is your product launching aligned with demand purchases (especially vacation time)? If you are a Finance team, does the Supply Chain know what your target is? Do they choose suppliers with their targets in their plans?

Conducting first-hand communication with the sales, marketing, product development, and manufacturing of the resource planning team plays a very important role. It will optimize your relationship with your supply chain.

That's a description of how the Supply Chain can impact corporate finance. Hopefully it will useful and can add to your insight and knowledge.

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