When it comes to driving business growth, research reveals that private equity executives struggle to understand supply chain managers’ value.
Across North America, organizations and companies depend on supply chains for a wide range of core functions. However, the Global Supply Chain Institute (GSCI) found that private equity executives had a different opinion. In a 2018 survey that included the opinions of 50 executives, supply chain functions were ranked as ‘relatively unimportant’. In addition, only 16% stated that they implemented a ‘multi-year strategies for achieving supply chain excellence’.
According to Investopedia, a supply chain is defined as,
Network between a company and its suppliers to produce and distribute a specific product to the final buyer.
In addition to transporting goods from point A to point B, supply chains also help companies ‘reduce cost’ and ‘remain competitive’. Therefore, why would a company consider a supply chain to be unimportant?
This article by Morai Logistics reinforces the critical role supply chains play in the growth of an organization. It also discusses the implications that may occur when an optimized supply chain isn’t integrated.
Supply Chains and Business Growth
When we make a purchase on a digital platform for instance, we usually can expect our item to arrive within 3 to 5 business days. However, there are many moving pieces that occur behind the scenes of an organization’s efforts to deliver products efficiently and on-time. The ability for customers to receive products is reliant on supply chains. This network delivers an end-to-end experience built on collaborative efforts between suppliers, manufacturers and third party logistics (3PL) providers.
According to Logistics Bureau,
The success of your business links inextricably to the performance of your supply chain.
In an article on supply chain management leadership, Forbes states that traditionally a supply chain would be used as a ‘reactive tool’. However, as they have evolved, they are now an important strategic initiative that spreads ‘value throughout the organization’.
The integration of a robust supply chain can benefit an organization in many ways, including the following:
- Greater visibility
- Enable an organization to cut costs
- Influence ‘shareholder value’
- Increase customer satisfaction
There is no denying that a supply chain is an important vehicle when it comes to driving an organizations success. Let’s look at the hardships that may occur if a supply chain management strategy isn’t implemented.
Failure to Implement Supply Chains
As mentioned earlier, a survey conducted by Global Supply Chain Institute (GSCI), indicated an interesting disconnect. There were a considerable amount of companies that didn’t understand the function, purpose and benefit of a supply chain. A lack of awareness and failure to implement supply chain strategy, was also found to lead to poor performance. This ultimately resulted in a ‘performance gap’, which would impact the organization’s bottom line. In addition, it would also cause the organization to lack competitive advantage against other players in the industry.
The importance of implementing a supply chain goes beyond transporting product. It enables organizations to place their customers and bottom line, as a top priority. It also introduces efficiencies into the selling and exchange of goods. This reduces costs, keeps customers satisfied and generates revenue. It’s important that employees in leadership roles and across an entire organization, recognize the significant role a supply chain has in growing their organization.
