The Importance of Supply Chain Management – A Supply Chain Guide

Supply chains have the potential to make or break a company, especially under the increasing pressure of the ‘Amazon Effect‘ 

This phenomenon refers to heightened consumer expectations for faster and cheaper delivery services, influenced by Amazon’s operational efficiency. Consequently, it is more critical than ever that supply chains are carefully managed.

Supply Chain Management (SCM) is the process of overseeing and controlling the movement of goods and services from manufacturer to customer. A supply chain manager’s goal is to improve the efficiency of the supply chain and reduce costs. For that reason, they will typically oversee the entire process, including:

• Procurement of raw materials: This includes where the materials are sourced, agreements held with the supplier, and the timing and process of transferring the materials to manufacturing sites or into the ownership of the organisation.
• The size and location of manufacturing sites and warehouses: Key considerations are the volume of goods the sites can process, the distance from other key sites (the further away, the higher the transportation costs), and the logistics of moving goods from the site into the next stage of the supply chain.
• Partnership agreements: The supply chain manager will want to ensure that all agreements with suppliers and manufacturers minimise delay, maximise efficiency, and provide value for money.
• Transportation: Transportation is a huge part of supply chain investment, so opportunities to reduce costs could potentially have a huge impact. Anything from the method of transportation being used to the time of day goods are being moved, can affect the chain.
• Changes to scheduled events: Any alterations to events that occur regularly, such as changing a bulk dispatch time for orders from morning to evening, will fall under the supply chain manager’s remit, as these changes could have an enormous impact on the rest of the chain.
• Inventory management: The processes used to collect, store, move, and dispatch inventory can all affect the supply chain, so a supply chain manager will monitor these carefully. The length of time that inventory is held can also have a large impact on a company’s profits.
• Customer order processes: The customer is the beginning of the supply chain, as it is their order that creates the need that results in all of the movement of materials that ends with a product in the customer’s hands. Therefore, the way a customer’s order is processed is an integral part of the chain.
• Order dispatch processes: How inventory is removed from a warehouse and processed as an order before being shipped to the customer can affect the speed with which the customer receives their goods. It can also affect the likelihood that they receive all of their order and not something else.
• Tracking customer orders: The final stage of the product’s journey is still fraught with possibilities of delay and disruption. If this is in your company’s control, there might be improvements to be found. If not, then your supplier agreement will determine how quickly and efficiently the customer receives their order.

With so many elements making up the supply chain, all of which are dependent on the others for smooth operation, it would be easy for one element to negatively affect your business. In 2024, 1 in 5 UK businesses reported that at least one factor was causing supply chain concerns for the next year (rising to 27% for organisations with 10 or more employees). These concerns included increased barriers to trade and shipping disruption. But supply chain management isn’t just about avoiding disaster – it can also have positive effects on your company. The benefits of efficient, effective supply chain management can include the following:

Improved customer satisfaction

An inefficient supply chain can result in customers receiving only part of their order or even the wrong products. SCM can not only ensure that customers receive their orders correctly but also support their delivery in a timely manner.

Products in the right location

If a hospital urgently needs a specific type of ventilator but has to wait weeks for it to arrive, patient care could be compromised because the equipment wasn’t where it needed to be. Conversely, if the hospital receives a surplus of ventilators it has no immediate use for, valuable storage space is wasted, and resources are tied up unnecessarily. SCM ensures that products are available in the correct location at the correct time.

Reduced operating costs

Supply chain efficiencies can reduce costs at multiple points along a product’s journey to the customer. For instance, deliveries that arrive as they are needed reduce the need to hold inventory in warehouses for prolonged periods of time. But these aren’t just your costs – an efficient supply chain can reduce costs for partners and other businesses, who are more likely to renew contracts as a result of these savings.

Costly delays avoided

Production delays can result in dissatisfied customers and high costs. In fact, supply chain delays are reported to be costing UK businesses @12.2bn annually. Equally, stock kept in storage for pending orders is actively costing you money. Reliable delivery of materials to factories or assembly plants lowers the risk of the huge expenses caused by production delays, and efficient dispatch of orders reduces costs incurred by the storage of inventory.

Boosted profits

Reducing reliance on warehouses and transportation costs similarly reduces expenditure. Efficient SCM can also increases cash flow by making your organisation a more attractive supplier to customers for its speed of delivery – customers who may then recommend you to others.

With so many elements to them, supply chains can end up becoming complicated and even oversaturated. As of April 2025, supply chain downtime is estimated to have cost UK and European businesses over £80 billion. Applying the lean philosophy to the supply chain offers the potential for efficiency-based savings and increased customer satisfaction.

What is a lean supply chain?

A lean supply chain is a supply chain operating at its very best. It supplies the goods or products to the end customer in the most efficient manner possible, with minimal waste and loss and enough flexibility to adapt to unexpected delays. Essentially, a lean supply chain is the result of ‘trimming the fat’, such as ensuring that products aren’t spending too long being unprofitable in warehouses or eliminating any unnecessary operation costs (such as excessive fuel consumption).

What benefits does a lean supply chain offer?

Implementing a lean supply chain can provide a business with a number of benefits which may lead to increased revenue and improved profit margins. By refining the process from your supply chain, organisations may also reduce associated costs. And, of course, fewer expenses mean that the profit margin on each of your sales is that much greater. Here are a few other benefits a lean supply chain could provide:

• Waste reduction: Waste prevents supply chain efficiency and requires disposal, processes and transport. Lean implementation identifies where waste can be reduced. New methods may use more materials or recycle waste into usable resources, and alternative materials can enhance customer recycling.
• Manufacturing process improvements: Analysing the manufacturing process can help identify areas for improvement. This can open up efficiency opportunities that can help reduce manufacturing defects, waste, and returned goods, ultimately saving costs and boosting quality.
• Faster upgrade cycles: Offering your customers a superior product can give you an edge over your competitors, as can beating them to market with it. If the new product is ready to ship and you still have stacks of old inventory, the resulting delay might cause delays and lost opportunities.
• Streamlined processes: As your supply chain grows and incorporates new third parties, processes can become overly complex. Lean strategies ensure that operations remain efficient, eliminating unnecessary tasks and reallocating time and resources to areas with higher ROI.
• Improved customer satisfaction: Removing unnecessary steps in the supply chain puts your products in your customers’ hands that much faster. This speed enhances customer satisfaction, potentially increasing the likelihood of repeat business and fostering brand loyalty.

However, a supply chain can be too lean.

While lean principles can enhance efficiency, misapplication can lead to issues like delayed order fulfilment. Incorrect implementation of lean principles (which one industry writer humorously coined as L.A.M.E. – Lean As Misguidedly Executed) can undo the benefits you could have gained by building your lean supply chain. The trick is not to eliminate too much waste. While having some inventory in stock will cost you storage fees, it means you can quickly dispatch orders. Maintaining contracts with two suppliers might duplicate some processes, but it might also prevent your supply chain from grinding to a halt if one supplier faces problems or help if you need to react quickly to a spike in demand.

The integration of artificial intelligence (AI) into supply chain management is starting to play a crucial role in enhancing efficiency, predicting demand, and automating complex processes. AI technologies such as machine learning and data analytics help companies to enhance their logistics operations, improve forecasting accuracy, reduce operational costs, and increase agility in response to market changes.

A Quality Management System (QMS) can help an organisation make huge strides in building a lean supply chain by fostering working procedures that can help you achieve enhanced productivity, improved efficiency, and reduced waste – all key ingredients of a lean supply chain. Your organisation will also enjoy wider benefits, including consistent quality and clear goals for continual improvement. A QMS also has the added benefit of instilling confidence in both new and existing customers, due to its global recognition, and clearly indicates that delivering consistent quality is important to your organisation. This sort of confidence is vital within a supply chain, as every member needs confidence that their suppliers won’t let them down.

Find the answers to some of the most common questions regarding the role ISO standards can play in supply chain management here.

Q: Which ISO standard is related to the supply chain?

A: ISO 9001 is the world’s most recognised Quality Management System standard. It is designed to support operational consistency and continual improvement, which can contribute to enhanced efficiency and customer satisfaction. This standard can be particularly beneficial for streamlining processes and boosting efficiency, particularly in complex logistics operations. Read The Ultimate Guide to ISO 9001. Beyond ISO 9001, all management system standards encompass control measures to aid with optimised operations. 

Q: Does ISO 14001 cover supply chains?

A: Yes, ISO 14001 focuses on Environmental Management Systems (EMS) and includes considerations for supply chain impacts. It promotes sustainability and aims to reduce the environmental footprint.

Q: How can ISO 14001 impact the environmental aspects of supply chains?

A: ISO 14001 provides requirements for implementing an effective Environmental Management System. It helps businesses to minimise their environmental impacts, enhances sustainability, and supports compliance with environmental regulations. Adopting this standard demonstrates a commitment to environmental performance improvement.

Q: What does ISO 9001 mean in the supply chain?

A: ISO 9001 supports businesses in establishing efficient processes and policies that promote quality and consistent performance across the supply chain.

Q: What advantages does ISO 9001 bring to supplier relationships?

A: ISO 9001 helps foster better communication and clearer expectations with suppliers by demonstrating a commitment to quality management. It supports adherence to quality standards, can reduce the risk of supply disruptions and support more consistent operational outcomes through defined quality expectations.

A well-managed, lean supply chain, supported by a Quality Management System and ISO certification, can enhance an organisation’s operational efficiency and support improved customer satisfaction and cost-effectiveness. To find out more about Quality Management Systems and how they can benefit your organisation and your supply chain, take a look at our comprehensive guide to Quality Management Systems.

Get started on your journey to strengthen your approach to supply chain management through ISO 9001 and ISO 14001 certification with British Assessment Bureau. Request a quote today or contact our team to discuss your needs.