Supply chain management is a part of business whether it is small/large or the business is running for profits or non profit purposes. Supply chain management process involves managing fourteen functional areas, according to The Institute of Supply Management. The fourteen areas are purchasing, sourcing, logistics, quality management, inventory control, material management, transportation, disposal, warehousing, distribution, receiving, packaging, product/service development, and manufacturing supervision. These fourteen functional ares helps in increasing the profits of the company and improves the customer satisfaction in one or other way.
Supply chain management applies to even small businesses which may consists of 1 to 3 people, as any business uses at least one out of the above said fourteen functional areas. Purchasing through a consortium of non-competitive businesses is an example of the strategies that can be easily implemented. Analyzing the supply chain is the first step in an effective supply management program.
Benefits of the supply chain for small businesses:
- Supply chain software helps the small businesses to lower the costs and makes the supply chain more effective and efficient.
- When sales are down and costs are rising, supply chain management enables an organization to maximize available cash and resources.
- The outsourcing of the supply chain processes allows the small businesses to focus on the core competencies and to work towards achieving organizational goals.
- A 40 percent return on investment can be obtained by lowering costs, improving productivity, and increasing opportunities with supply chain.
- The global supply chain process allowed small companies to export their products to other countries at less costs.