Supply Chain Management

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What is Supply Chain Management?


Supply Chain Management (SCM) is the management of the flow or supply of goods and services from the point of origin to the point of consumption. 

SCM involves the movement and storage of goods from raw materials to finished goods. It is done by creating a network chain of a supplier from the manufacturing sites to the companies or the location of point of sale . These supplier’s networks and links are crucial in the SCM to supply goods and services effectively and economically. The economic supply benefits both manufacturers and retailers to reduce inventory costs.

Study shows that 57% of companies believe that SCM provides a competitive edge to their business. The end goal of SCM is to improve the quality and performance of supply. The convenience of this supply chain helps manufacturers in shipment of goods and services, as they can reduce or increase the limit of supply according to the demand.



How Supply Chain Management Works?


The supply chain is a reliable link of suppliers for the smooth flow of goods and services from production till shipment and distribution. Every product that reaches the market is the result of organised and planned efforts of supply chain management. Recent studies show that 65% of executives report changes in the supply process.

These are components that are crucial and responsible for the performance of supply in the SCM system.
  • Planning

    In the process of supplying goods and services planning is the most crucial stage. It is done before the beginning of the supply chain. While planning the entire supply process the SCM checks all the important factors like manpower required, the demand for product or service, profit, costing, etc.
  • Sourcing

    In this process, SCM chooses the supplier for the supply of goods and services. It is essential to provide good resources to the suppliers for the quality and performance of the whole process. SCM works to maintain a good relationship between suppliers and manage the ordering, receiving, and payment process.
  • Manufacturing

    In this process, SCM works to organise the raw materials and manufacturing of the product. All the required quality checks, the packaging process, and the delivery schedule are done in this stage.
  • Delivery and Logistics

    SCM organizes all the orders and schedules the delivery in this stage. Dispatch of the products, receiving payments, and invoice generation is the key process while delivery. Transportation and logistics account for around 12% of the global GDP. 
  • Returning

    A supply network is created to pick the exchange or return products from the customers in this stage. 

Importance Of Supply Chain Management


An effective supply chain network helps the organisation to create and maintain the standard and quality of supply for the customers. It helps the manufacturer and companies to cut down the cost of supply from the production to the delivery. With good supply partners and networks, companies can supply the goods and services globally to the International markets.

Supply Chain Management is important to solve the delivery and return/exchange related problems of the customers. It works constantly to improve the quality of service by identifying the potential problems and issues in the supply process. SCM software and analytical tools further organize the ordering and shipment process of products.

 

Key Features Of Supply Chain Management


There are certain factors in the SCM to make the supply process of the product more effective. These are some of the key features in SCM which is crucial to maintain the good reputation of the organisation.

  • Connected : 

    Managing organised and unorganised data from social media and other internet platforms.
  • Collaborative 

    Collaborating with the supply partners to improve the supply performance by using a cloud-based commerce network.
  • Cyber aware 

    Protection of  the SCM system from hackers and other cyber-related issues.
  • Comprehensive

    All the data and insights are scaled in real-time to avoid future supply errors. 50% of professionals believe technology plays a crucial role in the supply chain industry.

Example Of Supply Chain Management


One of the classic examples of supply chain collaboration is Walmart and Procter & Gamble who started working together in the late 1980s. Retailers and manufacturers used to share limited information before these two companies started working. Because of its good influence and strategy, Walmart formalised the retail link system in the early 1990s. 

Another good example of SCM is Walgreens Boots Alliance Inc. which worked effectively to transform its supply chain system in 2016. This company has one of the largest pharmacy chains in the United States.

CONCLUSION


SCM plays an important role to overcome all difficulties in the supply chain. It helps companies to find the solution to all the challenges in the process of supplying products from the production to the marketplace. The organisation needs to have a dependable supply chain network to provide better service to the customers.

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