Benefits Of Value Chain Management In Supply Chain

If one takes a step back and analyzes the macro picture of an organization, one of the first aspects that one would observe is the associated value chain management. This concept established by Michael Porter in 1985 offers an array of benefits and comes with a big vision. This principle and the digital dashboards of today that are devised from it can portray how to maximize value. In order to manage the flow of production and sales from inbound logistics, marketing and sales, and service, it is extremely beneficial. There is no doubt or debate on the superior outcomes. Naysayers are far and few.

Firms abiding by this principle of value chain management experience several crucial advantages in delivery, profits, and relationships with customers and vendors. Let’s take a snapshot of the different types of benefits gained by organizations by effectively monitoring roll outs based on this formula for success.

Benefits Of Value Chain Management In Supply Chain

The Benefits are for All

 There is an array of advantages for not just the organization but also for the vendors, distributors, and the clientele.  When companies opt for organized methods, they are able to avoid issues that may create gaps between vendors or distributors. The ultimate aim to ensure that the end consumer sticks to the goods and services. Let us see how all of these impacts the industry as a whole.

Timely delivery: Reduced delivery time largely benefits any distribution channel. A manufacturer can have better ties with wholesalers or retailers by delivering orders swiftly. Resellers also gain as they quickly and effectively coordinate the buying and selling accordingly. The final purchasers also benefit from faster and much more consistent on-time delivery and all the vendors and trade channels are effective.

Optimized inventory: Related to the first point is this one. It means having the ability optimize the inventory levels. Retailers work closely in making this happen. The concept of just-in-time inventory processes are a part of the overall value chain management. This increases more frequent orders. Excess inventory is costly and a fast moving one is always preferred. There is no potential for wastage. There has to be a trust relation between vendors, retailers and the firm which is beyond mathematics and metrics.

Accelerated profits and revenue: The bottom-line benefits are always the financial gains. When one has efficient logistics and distribution mechanics, clients can have better access to goods and services. The marketing and sales efforts help in getting the customers interested and motivate them to purchase goods, no matter what is the pricing. The desire is created by this crucial step. The potent combination of reduced logistics and distribution costs and optimal prices and revenue make up the best possible returns.

Improved Customer Relationships:  By smartly looking into the initial value chain factors such as inbound logistics, operations and outbound logistics, resellers can optimize costs for customers and reduce time of delivery. This is beneficial for enhancing customer relationships. There are often loyalty programs or reward programs generated to attract customers and gain trust. This is also a subtle persuasion move for a long-term purchase.

Thus, in this dynamic business world and its multi-level players, it become important to use the most useful principles for success metrics that prove competitive advantage. Both value chain management and supply chain management are interdependent for success.