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It Is Important For Companies To Consider All Of The Facts When Using Supply Chain Management

Good companies are using supply chain management to control waste, manage resources and increase profitability.Supply chain management is usually associated with pull management techniques.Pull techniques are in direct contrast to the old version of inventory management that relies on forecasts and in which inventory is created to meet a possible demand rather than a real demand.Push techniques are really good for taking care of demand immediately as the stock is on hand and just needs to be shipped out.There are unfortunately very few products that actually make for good push products, so a lot of inventory sits in a warehouse waiting for the demand to catch up.This eats up resources both in the making of products that are not immediately sold and in the storing of those products.

Supply chain management using pull techniques instead allows companies to provide the products as the supply is needed.This is great for managing inventory not only of finished products but also of all the parts that go into a specific product.Nothing is made or ordered before there is a proven demand for it.For most products, this is all that is needed.When a purchaser orders a set amount of stock that stock is sent out which creates the demand for new stock.Then the whole line goes into action to replenish the stock that was just sold on the basis that it will be ordered again.

The problem with this type of system is that it sometimes has trouble adapting to a dramatic increase in demand.This can leave partners and customers dissatisfied.Some people may purchase an item during a time when it is popular, but if it is unavailable, they may decide not to pursue getting the object at some point in the future.Instead, they may settle for a substitute or they may forgo the purchase altogether.

Not having a lot of stock on hand allows the company to use those resources for something more profitable, using lean supply chain management techniques still allows the company to meet demand on products while at the same time keeping the company from being overwhelmed by unsold product, which is the same as lost opportunity in the business world.That can be a powerful tool for companies to leverage their innate manufacturing abilities to create more than one type of product and to manage the production of those products so as to gain the maximum of profit with the minimum of waste.
These techniques can be made more effective when company suppliers are on the same page.

Companies that are willing to deliver smaller initial quantities for a rate that is the same as a bulkier delivery will make great partners for those using lean supply chain management.Without these types of partners, the company may need to pay more for the parts that it needs to make a product.It is important for the company to weigh that cost versus the cost of storing the products and the potential to use the money that would be stuck in the form of parts somewhere else.Often times, it is easier to take in a smaller number of parts and eat the initial cost.

Whatever choice the company makes when managing the supply chain, it is important that all of the benefits and risks are taken into account.The customer should never be inconvenienced for the sake of profit because without the customer, there is no profit and companies will find consumers turning to other companies that an supply their needs immediately rather than wait for one company to catch up.

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