Supply Chain Management is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. An effort by the supply chain firms to develop and run supply chains in the most effective and efficient way possible.
How does Supply Chain Management work?
SCM attempts to centrally control or link the production, shipment, and distribution of a product.
By managing the supply chain, companies can cut excess costs and deliver products faster. By keeping control of internal inventories, internal production, distribution, sales and the inventories of company vendors. Even though supply chains have existed since a long time, businesses have recently started taking notice of how important supply chains are.
Here are 5 important tips that will help you increase efficiency in supply chain management:
- Increase your supply chain’s visibility- Supply chain visibility refers to a company’s ability to track each and every component of a product as it moves its way from the suppliers’ hands to the customers’. You can promote good visibility by giving the suppliers the ability to check inventory in real-time so that they have a better understanding of the current situation which will enable them to plan ahead and fulfill future demand.
- Invest in employee development- Any SCM worker will agree that operating an efficient and streamlined SCM is like running an obstacle course on a daily basis. There is a new set of problems each and every day that needs to be solved, especially with expensive, fragile or perishable goods. Staff development strategies involve not only a formal training curriculum, but also on-the-job training, coaching, mentoring, rotation through multiple assignments and training based on scenario modeling. All of this helps employees to understand not just how processes work, but also the impact of them on the business.
- Leverage New Tools - The technology that exists today plays a huge role in strengthening SCM. For example, implementing a good Warehouse Management System (WMS) is what helps successful companies to streamline their SCM. WMS makes it easy to track, document and evaluate the effectiveness of SCM over time. It strengthens data collection and provides valuable insights through data analytics. Companies that wish to achieve a higher level of SCM should consider investing in transport management software. The use of computerized shipping and tracking systems helps to integrate all operations from one panel which will eventually increase the efficiency of the company overall.
- Become “Fact-Based” - In order to find true success, companies need to develop a “fact-based” culture. Rather than accepting assumptions at face value, employees need to dig for factual evidence. Managers and executives need to stress the importance of fact-based analysis among supply chain teams in order to improve success in logistics. Assumptions are important in order to grow but fact checking will make things easier to be understood even in the long term. You will be able to look back and analyze the changes you made and why you made those.
- Align Your Supply Chain with Your Business- Sales and Operations Planning has made it easier for companies to align supply chains with the business. However, companies often lose track of the importance of this alignment due to critical operational pressures and additional factors. Make sure that those higher up in your manufacturing company realize the importance of aligning your supply chain with the business and make it a top priority.
- Raise Cost Awareness There are many uncontrollable factors and variables with supply chain management. As a result, different managers along the supply chain often are unaware of each other’s expenses. Having centralized financial data pinpoints exactly when and where the organization spends money. This will encourage cost related communication and strategies for consolidating expenses and streamlining processes.