What is Supply Chain Management?

08/03/22

What is Supply Chain Management?

What is Supply Chain Management?

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Supply Chain Management is the full management of the products and services flow from raw materials to finished goods. SCM exists to increase customer value and get an advantage on the market. It covers every process from product creation to its delivery to the customer. 

Main components of the SCM:

  • Planning. If you want to satisfy your customers, you should plan everything. From resources to delivery.
  • Sourcing. Look for good suppliers who have all the goods and services you need to create your own products. Develop stable relationships with your suppliers, and monitor all the processes (inventory management, orders, receiving, and payments).
  • Manufacturing. You can keep in order all the things that are required for product creation: raw materials, quality testing, packaging, delivery schedule.
  • Logistics. Control customers\’ orders, plan and schedule deliveries, track invoices, and accept payments.
  • Returning. Build a network that will operate returns of unwanted or defective goods.

What Skills are required for SCM?

The constant development of technologies requires a combination of technical and business knowledge, along with communication skills. Also, you should be able to influence department leaders inside your business. By having all the required traits, you will be more effective when it comes to working with finance, sales, and marketing. The more knowledge you get, the more effectively you can operate the supply chain.

Technology doesn\’t stay still. Improvements and innovations are presented almost every few weeks. You, as a strong supply chain leader, should know about everything that has a significant impact on SCM. Grow your communication, collaboration, and leadership capabilities but don\’t forget about technical knowledge.

Benefits of the SCM

Supply Chain Management provides wide possibilities for your business. There are three basic benefits. 

Lowers Overall Costs

When you have responsible suppliers and advanced technology, your business can run on lower costs and better respond to new customer\’s needs. For example, you can avoid over-producing by monitoring demand. You will reduce labor, the number of needed materials, and also transportation and inventory management costs.

Increases Income

If you utilize modern technology, it allows you to respond to the customers\’ demands faster. You will always know how much of a product you need to produce. When you make just enough, saved resources and labor can be used for new products or services to expand your income sources.

Allows to Properly Utilize Assets

After you effectively organize the supply chain management, you can start using the assets more productively. You won\’t wear equipment and transport that fast, and you\’ll utilize as many resources as needed without over-producing.

SCM allows your business to develop and work faster and more efficiently, making your products desirable and always available.