Supply Chain in Business; Why?
Increasing profit of margin, by cutting costs is a myth! Increasing profit of margin; by reducing flamboyant expenses is the truth! Finding out the expenses is supply chain. The business cries out that margin of profits have reduced and cost incurred; increased! We hope the business houses would understand point of terminus ere long. The resources are depleting and scarce, agree. The customers are ever increasing and so in the competition; all problems, agreed, everybody knows! How and where does any company make money? Is apple selling mobile phones and Samsung selling mobile phones competitors? And do the money is only by selling goods (mobiles)?
Please allow me to present another point of view. Today businesses are more responsible! They waste less, also they understand products are for the people who buy their products and not the other way round. Interestingly Meetings, conferences, virtual offices etc have got a hit to hotels, real estate etc, due to more technological, telecommunication betterment! However until and unless; we can transfer goods, like people in si-fi movies we still have to work around physical transportation of the goods. Hope it doesn’t happen soon!
I would like to share a few questions, that land up on my platter again and again; would like to put across the business point of view into it. Where to reduce the costs? Where lies the cost, identifying the cost is easier; responsible for driving the cost is opia! Is everything going to be online? No dear, it is just going to make small and big companies have an equal opportunity to showcase, but service, delivery, sustainability would always rule. Mind it I have missed out; cheap on purpose. Nobody wants to look cheap user, perception matters! TATA Nano was an outcome of cheap product, however they rectified but increasing the cost. Where to reduce costs? Well by taking costs factors into account; than just crushing the supplier. A more mature understanding of the different cost factors, longevity and result oriented outcomes, you would make more money.
Just to give you an example, like every company Nokia wanted to increase its profit of margin. After much thought they cut down the size of the charging chord by an inch. People did not even realise it and money saved it money earned. However there is a lot of logical thinking behind it. Just to highlight the point is, it will happen when you look at it as complete thing, reducing here and reducing there might not be a very good business idea. As arm twisting is very limited and short term business solution, running a company based on such ideas generally face multiple problems and growth seems to be far fetched dream for such companies, over a period of time!
It is about looking at the bigger picture, assuring and taking into consideration that the bigger picture is a consolidation of many and many small pixels. Get the story right before making cost cutting a key factor and basis of expertise. These are gimmicks and mimics for big companies. So to be honest, NO. It is on the basis which helps a company to stand the test of time, all the times. Genuine efforts can never be undermined! If the capital raising , funding and crashing the prices a good strategy. I would not really say so, because exponential growth is what everybody wants. However let me remind you no company actually achieved exponential growth out of the blue. There were steps and years. Yes the customer base has opened to the world making it one big market, due to internet but that’s it. Nonetheless products do matter, acceptability, dependability and interestingly, the 20 mile growth mark!
A constant growth is better than exponential growth, that comes with the basics and basis are driven by information, ethics and clarity of thought process. This era is driven by information, more information that you shall have, more loop holes shall be identified, more planning and placing of products is possible. More importantly the flow and life cycle of the product would be highlighted. This all is involved when we talk about supply chain. So you like it or not, it actually drives and helps to rotate the wheel; called, business of fortune. For anything else find me! Before I forget Apple is selling a brand image and Samsung is selling new technology in mobile industry. You can identify with the features brought in by Apple vs Samsung, over the years. Both companies are making profits one is by because it is Apple and the other because of the upgrade-tion in the hardware! Competitors yes, basis of making money is different.
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