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Better Practices in Supply Chain Management

written by: Bruce Tyson • edited by: Ginny Edwards • updated: 3/17/2011

Better practices in supply chain management can help companies stay competitive during difficult economic times.

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    Introduction to better practices in supply chain management

    Addressing supply chain issues can often be difficult because important information concerning demand for a product or service takes 500px-Supply chain.svg too long to reach decision makers who provision supply. This condition often results in complicated disruptions in supply that often result in either insufficient or excess product availability that can result in forfeited sales or depressed prices.

    To help ensure a smooth communication of consumer demand to product suppliers and to accurately match supply with accurate representations of demand, users can improve their profits while reducing overhead.

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    Reduce Suppliers

    Businesses that are interested in finding better practices in supply chain management should consider reducing the number of suppliers they utilize. Doing this reduces the resources required to operate, making it easier to respond to changing demand information. Also, because fewer contacts are involved in the supply process, a more consistent flow of materials can be obtained.

    Some manufacturers may want to find aggressive ways to reduce the number of vendors by using consolidating agents that will make kits out of various goods sourced from multiple sources.

    The simplification of sourcing goods and services for routine business operations is key to managing the risks and improving supply chain management.

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    Building Better Terms

    According to Tech Republic, Apple has an advantage because it has developed a supply chain that is superior to its rivals, particularly in the mobile tablet market.

    Quantity buying, long term commitments, and transparent costing practices help Apple to have a major cost advantage with every iPad it sells. Most recently, that advantage was demonstrated by the ability of Apple to offer its upgraded iPad 2 device for a price that is lower than the Motorola Xoom, a competing device.

    As is the case with Apple, long term relationships can develop supply chains with advantages other than cost. With a reliable supply of important components, the company leverages its ability to consistently have a product available to satisfy a steady consumer demand that is rarely disappointed.

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    Optimize Location of Stock

    Many businesses realize that keeping inventory as close to the customer as possible improves its availability and accessibility. Although this is often true, it also limits the options that a business has to use its inventory for different products and services should patterns of customer demand change.

    By locating inventory closer to the vendor, however, businesses have more flexibility to use the supplies it purchases for different purposes when necessary.

    Rather than choosing between one extreme and the other, better practices in supply chain management will prompt businesses to carefully evaluate the way it positions the materials it purchases to provide for the best balance of availability and flexibility.

    Positioning of the supply chain can easily fluctuate over time as market conditions change and as finished goods achieve various stages of maturity.

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    References and Image Credit

    "The iPad's other big advantage: Retailers only get 3% off",

    Image Credit: