This blog describes some of the benefits of strategic supply chain optimization.
Strategic supply chain management and optimization have been a key competitive differentiator for the manufacturing companies for some time. These manufacturing companies designed their supply chain not only to find opportunities to reduce spending but also to demand and ensure input quality and timely delivery. The supply chain is critical for their profitability, and the input quality is directly reflected in the quality of finished products and the willingness of consumers to purchase them.
In contrast, the service industries are often at a loss in describing the strategic and financial impact of superior supply chain management for their large strategic spend categories, such as IT services, legal services, and consulting. These companies are not able to apply the same best-practice principles as manufacturers do. The supply chain management concepts pertaining to manufacturing, such as centralizing and coordinating, sourcing, and procurement, are not fully leveraged by the service companies. In fact, service organizations often use line-of-business managers to manage important parts of the supply chain in a decentralized fashion. These managers often make vendor decisions without ascertaining the benefits of cross-company historical performance, such as on-time delivery and quality of services rendered.
The financial impact of an improved supply chain in the service industry is not much different than in the manufacturing industry. Service organizations have direct inputs to their offerings from external service providers. The quality and timely execution of consultancies affect the end quality of these offerings and the cost of their development. Controlling costs is indeed part of the story, but, service organizations must also ensure that their external service providers deliver the results.
A strategic supply chain optimization in the service industry does the following:
The following diagram illustrates strategic supply chain optimization:
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As supply chain tools and processes in the service industry mature, strategic supply chain management has the potential to become essential to building a competitive advantage. The supply chain management is a powerful strategic enabler that can better analyze categories of expenditure, services, project costs, and execution results. You can collaborate and accelerate innovation with Social, make better decisions anytime and anywhere with Mobile powered by Analytics, and scale quickly and reduce costs with Cloud.
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