Benefits of Supply Chain  -  benefits of scm drive its huge importance

Supply chains , no doubt, are expensive and complicated at times. Yet because they leverage the over all efforts of reaching out to the ultimate customers in a cost effective and smooth manner that they've real benefit to have one or many.

There could be a situation where a supplier may satisfy the ultimate customer directly, for example a vegetable vendor reaching out to his customer by the road side.

This may not need any supply chain to work but suppose the same supplier meeting the needs of many customers spread along


the length and the width of his city , needing vegetable around the same time. Obviously , they may be needing one or many delivery outlets from the supplier, some stocking by the supplier and thus a small but suitable warehouse by the supplier.

Supply chains exist to overcome the gaps created when suppliers are distance away from the customers. They help in conducting operations that can be done only at a distance from the customers.

Benefit of supply chain can be understood by a simple imagination of a service that passes through various modes, covering various regions to finally reach the ultimate customers needing that service in yet another and various locations. It involves moving materials in geographically separate locations and meeting usually a mismatched demand of that material.


For example, let us say that a firm operating from four factories has to supply materials to eight customers. If all the factories supply to all the customers directly then there would be in all 32 routes !!

However, if all the materials from the 4 factories are offloaded in a warehouse that caters to the need of the 8 customers then only 4 inward and 8 outbound routes , that is 4+8 = 12 routes shall be

A well designed supply chain shall provide the following benefits :
  • Operations can be located in the best locations irrespective of customers locations

  • Bigger facilities can be created and hence economies of scale can be thought of

  • Large stocks need not be kept at the producer's end as the same can be kept with wholesalers near the customers

  • Retailers carry less stocks as whole sellers provide them the materials whenever needed

  • Lead times for retailers are short

  • Uninterrupted availability to customers

  • Transport is simpler and routine

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