Supply Chain Management, commonly abbreviated as SCM, is a myriad of activities specialised in optimising a product’s value creation and material flows from point of production to the final point of consumption. The term, ‘Supply Chain Management’ was coined by a British logistician and a well-renowned management consultant: Keith Oliver, in an interview hosted by Financial Times in 1982. Many managerial and financial specialists have revamped this concept to bring new perceptions along with the change of time. Currently, SCM embodies integrated strategies and process executions to manage the supply chains, financial and information streams, that necessitates activities such as demand planning, production, sourcing, storage, transportation, reverse logistics and more. Competent SCM today is an amalgamation of organisational strategies, reliable technological solutions and collaborativeness of entities. Confident Supply Chain Management can allow your corporate efforts to result in lowering costs, expediting the production cycles, and levelling up business functions spanning from marketing to utility services, to finance and more. Since the sustainability of SCM and sustainable procurement systems are areas of main concerns to any company surviving in the digital age, let us learn what SCM means to your organisation.
Supply Chain Management; what it means to your business?
Supply Chain Management is the managerial processes specialised in handling contents -such as finished goods, Work-In-Process items, or raw materials- to supercharge the business’s supply-related activities. In other words, Supply Chain Management upgrades the journey of the amalgamated network of activities and varieties of resources in supply chains from your manufacturing plants to the consumers who demand your products. Hence, all entities that are contributing their commitment in the supply chain are the driving force of successful Supply Chain Management; for Supply Chain Management coordinates their efforts to trim off the fat that is slowing down the supply chains of the business. Supply Chain Management controls important stages of supply chains such as the production of finished goods, shipment of goods and ultimately, the products’ distribution streams that lead to end-consumers. When the market recognises the quality of the business’s supply chains, products of your company can reach the prime of being valued by your marketplace while gaining the advantage of keeping your competitors at bay. This is why your team must closely supervise Supply Chain Management in your business to ensure that everything is done effectively. The prices you pay, the commitment you make, and the procedures you exert in your supply chains must be at their greatest in terms of efficiency, convenience, and effectiveness.
To brief, the two core ideas comprised in the concept of Supply Chain Management are:
- Every product that is successfully delivered to the customer represents a cumulative effort of a hive of organisations working together. Supply Chain Management refers to all these organisations collectively.
- Supply Chain Management does not confine to on-prem activities; it addresses end-to-end activities, procedures and services that are linked together with physical and information flows that enable finished goods to meet end consumers.
However, it is important that your business is apprehended on how leaner the supply chain gets with time. In the modern age, technologies and computer solutions keep transforming organisational efforts, enabling real-time updates and capturing analytical powers better by every passing minute. Before we talk about the role of technology in Supply Chain Management lets understand the basic anatomy of this process.
Introducing the Five Elements of Supply Chain Management
Generally, Supply Chain Management has five core elements that are housed in a traditional Supply Chain Management.
1. Planning
Planning refers to the enterprise’s readiness to meet precise customer demands by producing quality goods and services. Designing supply chain by handling the inventory statistics and managing manufacturing processes fall under this initial stage. Aggregate demands will be captured in this stage to align the causal actions of supply activities. This stage naturally prepares the company for the next three main activities:
- Sourcing- to procure what has been planned.
- Making- to plan what is ample to enable target production.
- Delivering- test and position all capabilities by matching them with quoted lead times and demands.
It is crucial that your company keeps close supervision on demand fluctuations to evade the Bullwhip effect and other detrimental forces that can slow down your supply chain progress. To do this, firms can harness technological solutions like CRM systems, ERP systems and WMSs to gather all vital intel to be fully-versed of current demands and corporate feasibility. The company must also determine the metrics that they can accommodate to measure the actual efficiency of the Supply Chain Management and digital instruments to gather insightful intelligence to elevate its performance.
2. Sourcing
Sourcing addresses resourceful partners’ search that can help you procure your goods and/or services to meet the planned or actual demands in the most convenient and most importantly in an economically efficient manner. The company can take measures to make profiles of suppliers to bargain their offers and test for their efficiency in providing you with their services of raw materials. For example, if your company is manufacturing perishable products, you will have to find suppliers with the lowest lead time. The nature of your goods, the supplier’s competencies and their offers must be comprehensively studied before you shake your hand on a deal. Technological solutions can be housed in your systems to maintain healthy supplier relationships and check how proactive their services are in motion. Key processes of this stage are:
- Ordering Inventory.
- Receiving inventory as required.
- Managing inventory appropriately.
- Authorising the transactions to settle purchase bills.
3. Manufacturing
This stage basically refers to all the activities that are done in the factories of your manufacturing sites; all activities related when raw materials are transformed to finished goods. It may generally include activities like:
- Accepting Raw Materials from Warehouses or Suppliers.
- Manufacturing the Products.
- Testing for the quality of the products.
- Packaging.
- Shipping.
- Forming Delivery Schedules and more.
This stage is continuously upgraded based on the feedback generated by consumers.
4. Delivering
This stage maps the roads of integration from finished products to end consumers- it can either be a direct delivery or an indirect delivery. This stage plays a vital role when surging brand excellence in the eyes of the consumer since the delivery time plays an important part in making the customers satisfied. The delivery channels and the logistics service enabling partners of the company must collaborate to unlock seamless deliveries to customers whether its via rail, road or air. This stage embodies activities such as:
- Coordinating all customer orders.
- Correctively scheduling deliveries.
- Proactively dispatching loads.
- Invoicing Customers and enabling easy payment methods for them.
5. Returning
Supply Chain Management does not cease when a product reaches the client’s doorstep or any end-consumer; there can be special concerns such as:
- Instances when the client finds the product unwanted.
- When the company delivers extra products by mistake.
- Events where the delivered goods have defected.
Post-delivery support also plays a colossal role in keeping the client satisfied. This process is termed as ‘Reverse Logistics’. Maintaining precautions and proactive services in such events is important because it can lead to the deterioration of the trust and satisfaction that customers will have on your company.
Benefits of Supply Chain Management Systems for your organisation
Supply Chain Management Systems are technological solutions that actively manage all supply chain activities and elevate customer value chains by adopting technological capabilities. Now that the e-commerce industry is soaring in popularity and customer efficiency not adopting an SCM system can, unfortunately, slow down supply chain efforts. In the 21st century iteration of industrialisation, a myriad of technological solutions influenced supply chain activities. Technology and manufacturing are too close-knitted to be discretely identified anymore. This is why you must be well-versed about the advantages of using a Supply Chain Management Software that is mainly contributing to making manufacturing companies compete-worthy in the digital age. Therefore, given below are some of the main benefits of fostering a Supply Chain Management System in your premises:
- Allows you to scientifically and mathematically find insights that will lead to cost reductions.
- Alleviate errors and risks regarding supply chains; for example, delayed shipments, logistic errors, defected goods and more.
- Integration with CRM solutions that tends to all customer inquiries and demands proactively
- It can house smart analytical tools and forecasting technologies to assist decision-making parties in streamlining supply chain activities and ensuring they are at their best versions.
- Automation of iterative tasks
- Effective online inventory management with Realtime warehouse updates
- Allow entities in the company’s ecosystem to communicate with each other effectively
- Secured access allows the system users to avoid theft or mishandling of sensitive corporate data
- Provide ultimate visibility of end-to-end supply chain activities under one glass pane
Conclusion
Effective Supply Chain Management is mandatory for any business that targets high for brand, operations and managerial excellence. Our data-driven cultures and never stable market demands are now necessitating the need for SCM systems. Companies are competing with each other by wielding technological advancements to optimise their supply chains every day. As SCM disruptions have a domino effect in influencing the productivity and client trust and all other different pinnacle junctures that must be cautiously managed. This is why SCM is an aspect that should not be overlooked by any company for it directly affects organisational sustainability and allows it to become future-proof in any uncertain market-centric uncertainty.
