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Supply chain management is a relatively new business function that has evolved significantly over the past decade and is becoming increasingly important as business environments become more competitive with margins constantly under pressure.

Business today is dependent on solid relationships through the supply chain to ensure that inventory is kept at optimum levels, costs are kept as low as possible and the distribution network is running efficiently.

Monitoring trends is a vital skill and can mean the difference between maintaining and growing market share and holding unnecessary inventory which costs money. Communicating demand trends with your suppliers is vital to maintaining good supplier relationships. For example, if your supplier is unaware of spikes in demand and receives a 5% increase in orders, he may prepare himself for future increased orders and plan for an additional 6% to 7% anticipating higher order volumes. This will leave your supplier in an undesirable position which could ultimately affect your relationship going forward. If however he is prepared for increased inventory orders at specific times during the year, the guesswork is taken out of the equation and you are likely to be treated as a preferred customer when you have unexpected inventory requirements.

An effective supply chain manager fosters good relationships with critical suppliers and service providers by keeping them informed. This type of essential management will ensure that the company receives preferential treatment from suppliers, be it with better payment terms, lower prices or preferential treatment in times of unexpected inventory requests.

The supply chain manager will always be cognisant of the cashflow implications of purchases and is dependent on timely invoice processing data, sales figures and profit margins in order to asses the ability to meet the immediate future inventory needs.

A well thought out supply chain management strategy that has been communicated through all levels of an organisation, with clear expectations from each department, detailing the effect of under performance in any one department has on the next processes in the supply chain gives responsibility and ownership of their departments performance to each manager.