Harnessing Supply Chain Management For Profit

Supply chain management is the management of the flow of goods and services. It incorporates all processes that transform raw materials into final products.

A well-organized supply chain management system involves optimizing operations functionality for improved efficiency.


Why is Supply Chain Management important?

The progress of a business is linked to the efficiency of its supply chain. 

A well-managed supply chain may remarkably reduce the operating expenses connected to that chain which leads to increased profit.

Supply chain management cuts across business functions and processes like demand planning, sourcing, merchandising, supplier relationship management, inventory management, inbound and outbound transportation, distribution management, store operations, etc. So harnessing Supply Chain management to improve profitability is crucial for improved business operations.


Here are five ways to harness Supply Chain Management for Profit.

  • Review and Analyze historical trends

Historical analysis can shed great light on Supply Chain Management in your organization, that’s why it is the recommended first step.

There is always a need to review and restructure current operations, current technology used and procurement functions to drive profitability through Supply Chain Management. 

Analyzing logistics, sales history and purchase orders give you more intel about your customers, vendors and operations. 


  • Refine Your Sales Channel

Sales is a critical part of Supply chain management.

How do your orders come in? How do you ensure excellent sales are delivered to your customers?

All these and more should be broken down into sales channels.

These channels make sales distribution simpler by reducing the number of transactions required to get a product to the consumer. They give you deeper insight into your sales operation and market.


  • Employ Key Performance Indicators (KPIs) Judiciously

Key Performance Indicators are powerful tools that focus on improvements to compete doggedly in the marketplace. They objectively measure progress towards desired goals. 

Tracking your KPIs help you view and improve performance over time. It guides you on the optimization of your supply chain.

Benchmarks should be set to help in assessing the current status of operations and identifying performance measures for best practices.


  • Utilize the Pareto Principle (80/20 rule)

The Pareto principle states that for many outcomes, roughly 80% of consequences come from 20% of the causes.

80% of your profit will likely come from 20% of your customers and 80% of your profits likely come from 20% of your products.

This means that 20% of your invested input is responsible for 80% of your result.

To increase profit, time should be spent on ensuring competitive pricing and utilization of service for the top 20% because this will save time and deliver more value to the business.

The Pareto analysis and The Pareto Chart can be used to prioritize areas that require the most change in your business processes and understand the qualitative internal factors.


  • Integration

Integration is key for seamless interaction between your teams because it keeps everyone aligned and working towards achieving the set goals.

Everyone should be given the right tools and resources to improve efficiency and increase success.



Increasing Profit in Supply Chain is possible and feasible. It takes analysing trends, employing better resources, tools and techniques and integrating within teams. These can improve your processes and pay handsomely over time.


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