7 Reasons Why SCM Logistics Is Essential for Your Business Success
SCM logistics is the process of planning, implementing and controlling the efficient and effective flow of goods, services and information from the point of origin to the point of consumption. SCM logistics encompasses all the activities involved in sourcing, procurement, production, distribution and delivery of products and services to meet customer needs and expectations.
Key Takeaways
SCM logistics is the process of planning, implementing and controlling the efficient and effective flow of goods, services and information from the point of origin to the point of consumption.
SCM logistics can create value for your business and your customers by reducing costs, enhancing satisfaction, increasing competitiveness and more.
SCM logistics involves various components, benefits, challenges, trends and skills that you need to consider and master.
SCM logistics is not just a matter of moving and storing products. It is a strategic function that can create value for your business and your customers. Here are seven reasons why SCM logistics is essential for your business success:
1. SCM logistics can reduce costs and improve profitability.
By optimizing the use of resources, minimizing waste, eliminating inefficiencies and streamlining processes, SCM logistics can help you lower your operational expenses and increase your profit margins. For example, SCM logistics can help you reduce inventory holding costs, transportation costs, warehousing costs, labor costs and quality costs.
2. SCM logistics can enhance customer satisfaction and loyalty.
By delivering the right products at the right time, at the right place, at the right quality and at the right price, SCM logistics can help you meet or exceed your customer expectations and increase their satisfaction and loyalty. For example, SCM logistics can help you improve your order fulfillment rate, delivery speed, delivery reliability, delivery flexibility and product availability.
3. SCM logistics can increase your competitive advantage and market share.
By offering superior products and services that meet or exceed your customer needs and expectations, SCM logistics can help you differentiate yourself from your competitors and gain a competitive edge in the market. For example, SCM logistics can help you offer customized products, value-added services, innovative solutions and sustainable practices that can attract and retain more customers.
4. SCM logistics can foster innovation and growth.
By enabling the integration and collaboration of various functions and partners across the supply chain, SCM logistics can help you leverage the collective knowledge, skills and capabilities of your supply chain network to create new value for your business and your customers. For example, SCM logistics can help you develop new products, enter new markets, expand your customer base and increase your sales revenue.
5. SCM logistics can improve your risk management and resilience.
By identifying, assessing and mitigating the potential risks and uncertainties that may affect your supply chain performance, SCM logistics can help you enhance your risk management and resilience capabilities to cope with any disruptions or changes in the market environment. For example, SCM logistics can help you diversify your supply sources, implement contingency plans, adopt agile practices and build trust with your supply chain partners.
6. SCM logistics can support your sustainability goals and social responsibility.
By adopting environmentally friendly practices, complying with ethical standards and contributing to social welfare, SCM logistics can help you align your supply chain activities with your sustainability goals and social responsibility commitments. For example, SCM logistics can help you reduce your carbon footprint, minimize your environmental impact, ensure fair labor practices and support local communities.
7. SCM logistics can enable digital transformation and data-driven decision making.
By leveraging advanced technologies, tools and systems, such as artificial intelligence (AI), blockchain, cloud computing, internet of things (IoT) and big data analytics, SCM logistics can help you transform your supply chain operations into a digital platform that can generate valuable insights for data-driven decision making. For example, SCM logistics can help you automate processes, optimize routes, track shipments, monitor performance and forecast demand.
Tips
- Use a supply chain management software or system to plan, execute and monitor your SCM logistics activities.
- Conduct a supply chain analysis or audit to identify your strengths, weaknesses, opportunities and threats in your SCM logistics process.
- Implement key performance indicators (KPIs) and metrics to measure and improve your SCM logistics performance.
- Benchmark your SCM logistics performance against your competitors and best practices in your industry.
- Seek feedback from your customers and supply chain partners to improve your SCM logistics process.
Statistical Report on SCM Logistics Global Demand
Supply chain management (SCM) logistics is the process of planning, implementing and controlling the efficient and effective flow and storage of goods, services and related information from the point of origin to the point of consumption. SCM logistics is essential for the successful functioning of the global economy, as it ensures a strong network between a company and its suppliers to manufacture or produce, then to distribute goods to customers. SCM logistics also involves managing risks, costs, quality, sustainability and customer satisfaction.
Trends and Challenges
According to a report by KPMG, some of the key supply chain trends that will shape the SCM logistics industry in 2023 are:
- Nations skeptical about cross-border trade cooperation: Geopolitical tensions have increased the demand for domestic self-sufficiency or ‘friend shoring’ relationships with like-minded and geographically close countries.
- Cyber criminals ramp up activity: Cyberattacks pose a serious threat to the security and integrity of SCM logistics systems and data, requiring more investment in cybersecurity measures and contingency plans.
- Key material access turmoil: The scarcity and volatility of raw materials, such as metals, minerals and rare earths, have created supply chain disruptions and price fluctuations, requiring more diversification and innovation in sourcing strategies.
- Manufacturing footprints change shape: The pandemic, environmental concerns and labor issues have accelerated the shift from centralized to decentralized or hybrid manufacturing models, requiring more flexibility and agility in SCM logistics networks.
- Retail and distribution supply chains morph rapidly: The rise of e-commerce, omnichannel retailing and consumer preferences have increased the demand for faster, cheaper and more customized delivery options, requiring more integration and collaboration among SCM logistics partners.
- Supply chain technology investments accelerate: The adoption of digital technologies, such as artificial intelligence, blockchain, cloud computing and Internet of Things, have enhanced the visibility, efficiency and resilience of SCM logistics operations, requiring more skills and capabilities in data analytics and digital transformation.
- Scope 3 emissions scrutinized: The pressure from investors, regulators and consumers to reduce greenhouse gas emissions across the entire supply chain has increased the demand for more transparency, accountability and sustainability in SCM logistics practices, requiring more innovation and collaboration in circular economy solutions.
These trends pose significant challenges for SCM logistics managers, who need to balance cost-efficiency with supply chain resilience, while also meeting the expectations of various stakeholders.
SCM logistics is a vital service for the global economy, as it connects millions of businesses operating across different regions or countries. However, SCM logistics also faces many uncertainties and disruptions due to various factors, such as geopolitical conflicts, cyberattacks, material shortages, manufacturing shifts, retail changes, technology innovations and environmental regulations. To cope with these challenges, SCM logistics managers need to have a mature supply chain planning capability, an agile and responsive supply chain network, and an end-to-end forward-looking visibility on key indicators. By doing so, SCM logistics managers can turn the challenges of 2023 into a competitive advantage.
Frequently Asked Questions
Q: What are the main components of SCM logistics?
A: The main components of SCM logistics are procurement (sourcing raw materials/components), operations management (producing goods/services), distribution (transporting goods/services) and delivery (reaching customers).
Q: What are the main benefits of SCM logistics?
A: The main benefits of SCM logistics are cost reduction, customer satisfaction, competitive advantage, innovation growth, risk management resilience, sustainability social responsibility, and digital transformation data-driven decision making.
Q: What are the main challenges of SCM logistics?
A: The main challenges of SCM logistics are complexity (managing multiple functions/partners), uncertainty (dealing with fluctuations/demands), volatility (responding to changes/disruptions) and competition (staying ahead of rivals).
Q: What are the main trends of SCM logistics?
A: The main trends of SCM logistics are customer-centricity (focusing on customer needs/expectations), collaboration (working with supply chain partners), customization (offering tailored products/services), circularity (adopting circular economy principles) and digitalization (using digital technologies/tools).
Q: What are the main skills of SCM logistics?
A: The main skills of SCM logistics are analytical skills (using data to solve problems), communication skills (interacting with stakeholders), strategic skills (planning for the future), leadership skills (motivating teams) and technical skills (operating systems/tools).
References:
https://www.rieti.go.jp/jp/publications/dp/15e034.pdf
https://openaccess.city.ac.uk/id/eprint/23275/1/Manuscript-BChain-FINAL-25-Nov2019.pdf
https://www.indeed.com/hire/c/info/supply-chain-management-logistics
https://www.oracle.com/scm/what-is-supply-chain-management/
https://en.wikipedia.org/wiki/Supply_chain_management
Essential Topics You Should Be Familiar With:
