Introduction:

Supply chain management is one of the most significant aspects of an organization. It helps the organization to reduce costs and efficiency. 

Four important factors in the supply chain are:

• Conveyance
• Detailing
• Locality
• Expenditure
• Stocks

These factors act as determining factors for responsiveness and are the strategic fit.

Conveyance:

Organizations use transportation for easy movement of their products and tools. 

Conveyance decisions are dependent on the mode of transportation and the route of conveyance. 

If an organization decides to transport its products by air, it increases its responsiveness and costs. On the other hand, if the organization chooses the land route, their cost decreases as well as the responsiveness of the conveyance.

The organization should also evaluate if they have the infrastructure for transportation or if they need to hire these services.

Transportation plays a significant role for every business, and when an organization is operating in two different places, it becomes a crucial part of the business.

Efficient transportation options help the organization bridge the distance between the two establishments of the same organization.

Detailing:

Information is one of the key aspects of the supply chain as with the proper flow of information, organizations can predict the quality to produce, when it is needed and where it is needed. It increases the effectiveness and responsiveness of the logistics.

Pliability plays a noteworthy role in providing the best possible product to the customers.

 Pliability helps to cater to the audience for their happiness.

It allows the organization increases its market share to earn profits.

It states that an organization must know how to grow or reduce its production.

It is not cost-effective to produce a higher volume of goods whose demand fluctuates with time. Organizations having these kinds of products need to be flexible in their approach rather than producing goods.

Locality:

The locality is the place in the logistics where the raw material and finished goods are stored. Work-in-progress materials are assembled. Locality closer to the customers can increase the efficiency of the logistics, but the cost of maintenance of so many premises is very high.

 Visibility of the business is not only good for the sale of your product, but it is also so helpful in creating a relationship with their customer.

The location of a business depends upon various factors like cost, availability, and accessibility by the customers.

Some factors play a significant role In the decision of the location for your business.

Customer satisfaction is one of the primary goals of an organization.

Organizations hold inventory to fulfill the need of the customer.

If the production is stopped for a shorter period, companies can satisfy the customer’s needs.

Organizations Also take care of the product if maintenance is needed to help the customer.

Fewer warehouses can reduce the cost but adversely affects the responsiveness.

Expenditure:

Expenditure is yet another aspect when deciding the purchases.

A business looking forward to manufacturing the product wants to have some equipment that provides value to the organization. 

An organization can have two types of expenditure while selecting the pieces of equipment. Either it could be the price of the equipment acquired or as an expense in the form of rent.

Companies looking forward to long-term Operations and are not willing to commit hefty amounts to acquire the place can take the lease route.

Stocks:

Stocks are the goods available to the organization in any form and at any stage. Stocks include raw materials, work-in-progress, and finished goods. Stocks levels in the organization depend upon the levels of demand and supply.

Stocks are costly elements in the organization. Organizations need to determine the requirement of the stocks. 

Stocks costs are associated with the order the manager makes for goods.

In the same organization, factories need to maintain the stocks of raw materials while the showroom needs to keep the inventory of finished goods produced by the factory.

Purchasing is one of the most important aspects of an organization as an organization can’t fulfill the whole raw material need internally. Purchase of required raw material or tools seems to be the most reliable option in such situations. Sometimes, companies get a better deal by purchasing it from the external market.

The importance of purchasing is out to test with the selection of raw material to make it into finished goods. The quality of the raw material is crucial for the organization to have properly finished goods.