What is Supply chain management and how it works?

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.

Supply Chain Activities:

  1. Product development
  2. Sourcing
  3. Production
  4. Logistics

Ideas on which SCM is based

  1. Almost every product that reaches an end user/customer is the cumulative effort of multiple organizations. These organizations are referred collectively as the supply chain.
  2. While supply chains have existed for a very long time, most organizations have only paid attention to what was happening within their “four walls”. For businesses to grow, there should be proper management and they should be aware about other links as well.

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.

The SCM coordinates the logistics of all aspects of the supply chain which consists of 5 parts:

  • The plan or strategy
  • The source (of raw materials or services)
  • Manufacturing (focused on productivity and efficiency)
  • Delivery and logistics
  • The return system (for defective or unwanted products)

A supply chain manager tries to minimize shortages and keep costs down. A supply chain is the connected network of individuals, organizations, resources, activities, and technologies involved in the manufacture and sale of a product or service. A supply chain starts with the delivery of raw materials from a supplier to a manufacturer and ends with the delivery of the finished product or service to the end consumer.

SCM oversees each touchpoint of a company's product or service, from initial creation to the final sale. With so many places along the supply chain that can add value through efficiencies or lose value through increased expenses, proper SCM can increase revenues, decrease costs, and impact a company's bottom line.

Supply Chain Management practices

To succeed in a growing global market, you need a supply chain that’s connected from start to finish, across your enterprise and beyond.

  1. Real-time supply chain planning: When using ERP systems and spreadsheets for planning, companies typically rely only on historical data, resulting in very less room for changes for when any disruptions occur in demand or supply.
  2. Unify supply chain planning with enterprise planning: Companies will have an advantage by synchronizing their short-term operational planning with their wider business planning processes to make real-time updates to inventory forecasts and supply.
  3. Anticipate the demand of the end customer: For consumer packaged-goods companies, predicting what customers want and when they want it is an ongoing challenge. A solution like Anaplan allows end-to-end visibility across the supply chain and beyond an existing network of wholesalers and retailers to sense demand signals from customers. As changing consumer sentiments will be rapidly identified and changes to demand for the product assessed, the company, partners, and customers will benefit from improved profitability, margins, and lead time.
  4. Leverage real-time data across all points of the supply chain: Supply chain planning typically involves a myriad of suppliers, channels, customers, and pricing schemes, models can become large and potentially unwieldy. Incorporating a solution that uses real-time data allows planning with great accuracy and reduces the risk of stock-outs or surplus inventory. We at Techaffinity Consulting are the experts with over 2 decades of experience in transforming the supply chains across industries. Connect with us for details.