Why the Supply Chain is the Most Vital Part of Your Business

Business woman communicating her needs to her suppliers Deposit Photos

Referring to the process through which a commodity is produced and distributed, a business supply chain is a critical consideration for all entrepreneurs. Regardless of your company's size and stature, how you source and receive your product's materials can have a significant effect on every other aspect of your business, whether you realise it or not.

Indeed, to illustrate the importance of a supply chain, we have compiled a list of considerations that could impact your operations, including why exactly the implementation of a supply chain strategy is a wise move to make.

The Importance of Supply Chain Management

As mentioned, the quality and effectiveness of your supply chain can massively impact other critical aspects of your business operations, both positively and negatively. This can happen in ways that you may not have initially realised.

Here are some of the benefits of an effective and efficient supply chain:

1. It Streamlines Product Flow

Perhaps the most significant advantage of a defined and effective supply chain is that it helps to create a streamlined product flow. From the sourcing of materials from suppliers, to the moment that your consumers purchase the goods either online or in-store, the entire production process benefits from being part of a tried and tested structure.

Rather than continually trying to source materials and rates every time you receive an order, the whole thing instead works like clockwork. This momentum is of particular importance to small businesses, offering a sense of cohesion, clarity, and even peace of mind in your day-to-day operations.

2. It Can Propel Your Business into the Future

As technologies emerge and businesses start to benefit from the insights and processes enabled by applications such as artificial intelligence (AI) and the Internet of Things (IoT), your supply chain can become a critical asset.

By gathering and analysing data on your practices, you can identify potential areas for improvement and growth, as well as see where you are wasting money and resources. This can then enable you to finetune your entire supply chain strategy, and even transfer funds or human resources to other aspects of your business.

3. It Reduces Your Operating Costs

One of the most important benefits of an effective supply chain is that it helps reduce costs. By putting time and effort into determining which suppliers can deliver quality items at the best value, you are improving your product as well as your bottom line.

This is particularly essential for small businesses, as it can allow you to become more competitive in the marketplace. It also enables you to synchronise your supply to align with the demand of your consumers, thus reducing the amount of overstock in your company warehouse and lowering your expenditure.

4. It Increases Your Profit Margin

Naturally, these reduced outgoings then have a ripple effect on the rest of your enterprise; with lower operating costs, you will begin to see an increase in your organisation's profit margin.

This can allow you to re-invest in other aspects of your business, such as your marketing plan, or to set aside as an emergency fund should you ever run into cash flow problems. Either way, it's a positive cycle for your company to be in, as any savings you make through your suppliers can be repurposed to attract new clients.

5. It Improves Your Customer Service

With a reliable supply chain in place, businesses are far better able to appease their customers. Consumers who receive their products promptly are much happier than those waiting for extended periods, whether they are ordering online in advance, or are seeking items readily available for purchase in-store.

Furthermore, by addressing critical concerns that your customers may have, such as environmental pollutants or inhumane labour conditions during the manufacturing of their purchases, you are demonstrating an understanding and willingness to adapt to modern consumer trends and desires.

Choosing a Supplier

As detailed, an effective supply chain strategy is good for your business. But how do you go about implementing one? How do you know which supplier is the right one for you?

These are some of the key points you should look out for when hiring a supplier:

Are They Reliable?

Regardless of the type of business that you run, you want to use suppliers that have a reputation for being reliable and punctual.

Within industry circles, it's generally not difficult to obtain reviews and feedback on a supplier's output, as well as their standing. For instance, if a company has a reputation for not fulfilling deliveries, being late, or even being inflexible, then this suggests that they may not be the best partner to work with – regardless of the quality of their goods.

Are They Socially Responsible?

As previously touched upon, modern consumers are far more conscious of where their products have come from, and how they have been sourced. Therefore, you have to take responsibility for the processes of your chosen supplier.

This involves contractors and sub-contractors, too. Many large organisations have gotten into hot water over the practices of suppliers on the ground with whom they have no direct line of communication. In 2020, this isn't an excuse. Unethical sourcing, exploitative behaviours, or use of suppliers with a poor labour record will damage your brand's reputation – sometimes irreparably.

Do They Offer Quality?

The importance of this point may depend on the type of business you operate, but you should look at the quality of the product or source material that you are buying, too. After all, as far as your customers are concerned, if the quality isn't good, then there is only one party responsible: you.

If possible, place a series of small sample orders with different providers before you settle on a permanent choice. Learn about your chosen supplier's quality control processes, too, while always remembering that, generally, you get what you pay for.


As these points prove, you cannot underestimate the importance of your supply chain. Streamlining the process through which commodities are produced and distributed is crucial to the success of your business. It also assists with leaps forward in customer satisfaction, thanks to both an ever-present flow of products and their consistently high quality.

Remember, close consideration of this issue can represent a critical step in increasing the longevity of your company, while simultaneously reducing operating costs and raising your profit margin. Therefore, it should not be ignored – at any cost.

Are you getting the most out of your supply chain strategy? Let us know your thoughts and ideas in the comments below.