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Supply chain management is often thought of as a cost factor and not a strategic process. That leads to grievances and lack of optimization. To be a better supply chain performer, you need to recheck certain facts often misunderstood. More importantly, it’s time to bust some myths and bring your organization up to speed.
Myth 1: It’s all about lowering costs
Actually, not all the time. Allocating higher amounts to better quality processes may lead to reduction in overall costs. Moreover, the amount invested in a new process does not include freight, packaging, quality, finance, etc. It is important to note that a well-focused solution is usually a one-time investment, leading to long-term improvements. Focusing on costs alone can inhibit innovation and competitiveness.
Myth 2: Investment in SCM applications results in rapid returns
Organizations in supply chain management feel that SCM applications will deliver some rapid returns on investment. But due to SCM priorities being poorly specified, downfall of organizations has been rather frequent. Not identifying what an application should do before buying the application leads to a cycle of discontinued investments and unrealized benefits.
Myth 3: It’s all about placing orders with suppliers for required products and services
Of course it’s not that linear. Maintaining a sustainable and cost-effective supply chain takes a lot more. You need to look out for different ways to improve procurement, order management software and supply chain management to keep up with an ever-changing commercial ecosystem. Through special analytics software, you can deal with what-if scenarios for decision making and see the degree of change vary with new suppliers, pricing, routes, etc., especially with respect to the bottom line.
Myth 4: It pays to deploy the best latest technology
The IT industry is driven by the needs of other sectors. Not the other way around. The latest technology cannot drive positive change, as organizations can only improve by deploying software that meets ongoing needs. The most sophisticated technology never works as well as a simple technology that solves problems at hand.
Myth 5: It’s okay to ignore IT because it’s just another commodity
It’s easy to ignore IT because of the expenses involved. Replacements and upgrades just seem to make it worse. But process-driven technology can significantly improve performance. What is not right for your business is big software suites that are made with the entire industry in mind. Purpose-driven modules deployed on a need basis after careful analysis of your requirements always work.
Some techniques in supply chain management include what-if scenarios. They are programmed in supply chain applications to let you check if certain decisions are going to work. Changing supplier routes and effecting change are matters you should know about in order to revise contract terms. That will actually help you see the best outcomes.
A better approach to supply chain management is to change the flow of inventory and reduce cycle time with effective inventory positioning. Technology can tell you how to do that and meeting variable demands stops being a threatening challenge. If there are more myths you want to discuss or debunk, do leave your comments below.
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