Effects Of Logistics And Supply Chain Management Services On A Firm

What is common between marketing, advertising, production cost reduction and streamlining of operations? These are all methods of improving the efficiency of a firm and their connect with the consumer market. Today, we live in a competitive world where numerous firms compete to cater to the same market of consumers. We observe that any attempt to increase the productivity of the firm always involves consideration of its effect on the consumer. Firms aim to minimize production and distribution costs while building up brand value to ensure long term healthy profit margins. An important tool of achieving this is the group of services known as supply chain services. In this article, we take a look at the effects of the same on the firm and its activities.

Internal Effects Of SCM In The Firm

The effects of supply chain services on the functions of a firm can largely be classified as internal and external. The internal effects of the firm are generally on the interaction between the departments and the co-ordination that is ensured between the same. The firm also has a range of distribution channels which are often integrated in the firm to ensure greater control over product distribution and to maximize the profit margin by retaining commission earnings. All these factors are controlled by the SCM services.

Integration also takes place between departments for convenient flow of information and team-oriented functioning of particular processes. Take for example, a large firm that caters to national and/or multinational audiences. Two departments within the firm could be the advertising and the market analysis department. Integration of these through SCM would help the advertising segment cater to the potential clientele in a more efficient manner owing to the inputs of their market analysis compatriots. In this way, SCM helps integrate key business processes.

External Effects Of Scm On The Firm

To a large extent, supply chain consulting works with the external factors that are associated with the distribution aspect of the firm. There are many firms that require warehouse and inventory services to store goods produced in anticipation of future demand. This is one of the numerous services that makes up supply chain services and its external effects. Streamlining the inventory process, maximizing productivity per inventory space as well as management of the transport and storage process are all examples of SCM; its external ramifications on the firm.

Supply chain consulting also deals with a network of employees that are not directly affiliated to the firm but perform pivotal activities to its performance. These include distributors and retailers in the market that are directly responsible for the products when it comes to final sale to the consumers. There are also excess-shortage paradoxes that exist within the supply chain of a firm. One region may have excess of the good while another market experiences shortage of the same. SCM helps solve such quandaries and thereby assists the company in reaching its maximum level of productivity and output.

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