Effective Supply Chains for the Success of an Organization

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Effective supply chains are critical to the success of business organizations. Development of supply chains should be accorded strategic importance. Achieving an effective supply requires integration of all aspects of the chain. Supplier relationships are a critical component of supply chain management. Collaboration and joint planning and coordination are keys to supply chain success. In order to accomplish this, there must be trust, effective communication, information velocity, supply chain visibility, event management capacity, and performance metrics.

It is essential for major trading partners to trust each other, and feel confident that partners share similar goals and that they will take actions that are mutually beneficial. Effective supply chain communications requires integrated technology and standardized ways and means of communicating among partners. Information velocity is important because the faster information flows, the better. Major trading partners need to be able to connect to any part of the supply chain to access data in real time on inventory levels, shipment status, and similar key information. This requires data sharing. Effective supply chains should have the ability to detect and respond to unplanned events such as delayed shipment, or a warehouse running low on a certain item. Performance metrics are necessary to confirm that the supply chain is functioning as expected or that there are problems that must be addressed. There are a variety of measures that can be used, that relate to such things as late deliveries, inventory turnover, response time, quality issues, and so on. Creating an effective supply chain begins by conducting a thorough analysis of all aspects of the supply chain. Many businesses are employing principles of lean operations and six sigma methodology to improve supply chain performance. However, lean supply chains can increase supply chain risk and may necessitate increased inventories to offset those risks.
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