Meaning of Supply Chain Management
Supply Chain Management is the management of movement of goods and services between producers and consumers. It monitors and control wide range of activities starting from procurement of raw materials till the product delivery at its final destination. Supply chain management completely handles entire production flow system of organisation in the most efficient way possible. It aims at developing and maintaining efficient supply chain in organisation. Supply chain is simply the connected network of peoples, resources, organisations, activities and technologies.
This network is important for efficient production and sale of goods and services. Supply chain starts from point when supplier delivers raw materials to company and ends with final delivery of goods to ultimate customers. Supply managers through proper management of supply chain are able to bring down the excessive cost and avoid any shortage. Supply chain management ensures that products are delivered regularly and faster to customers.
This enables companies in providing better satisfaction to customers and gain competitive advantage. The term supply chain management comprises of following components: Strategies for production, source of raw materials, making of goods or services, delivery and proper return system. In today’s time, it is important part required for every organisation for running flexibly and providing better service to customers.
Features of Supply Chain Management
Management of Inventory
Supply chain management focuses on maintaining an optimum inventory always in organisation. It keeps records and tracks supply of raw materials, spare parts and finished goods. Management of supply chain ensures that all inventories are available in right quantity at right time. It frames proper strategies for procuring and maintaining all inventories as per requirements. Supply chain management avoids any situations like understocking or overstocking.
Processing Customer Requirements
Supply chain management accelerates the production processes of organisation. It monitors all activities starting from purchase of raw materials for producing goods till final delivery. It ensures that all sales order are timely completed and handed to logistic team for delivering them on time. All this is done by creating and tracking orders of purchase, scheduling of suppliers deliveries, and also developing product and price configurations.
Forecasting of Demand
Anticipation of customer demands is necessary for every business. It can help them in fulfilling customers need efficiently and timely. All production activities are initiated in accordance with demand which helps in avoiding wastages. Through proper anticipation, business does not need to invest money in unnecessary raw materials and hold on excess finished goods. All goods are produced in accordance with requirements of customers thereby improving their confidence.
Supplier Relationship Management
Maintaining of better relations with suppliers is crucial for uninterrupted continuity of business. Supply chain management helps in properly managing all interactions with suppliers. It develops a proper network between suppliers and business through which they can easily interact. Proper supply chain enables timely procurement of all required raw materials from suppliers. Supply chain management solutions provides self-service portal through which suppliers can contact company in case of any issues or problems.
Managing Logistics and Shipping
Supply chain management helps in enhancing the delivery performance of business. It ensures that products are delivered faster and timely to all customers. It coordinates well with all transportation channels and warehouses. By supply chain management, companies can faster their delivery process and provide on-time delivery. This will help in improving the satisfaction of customers.
Proper handling and inspection of damaged or defective goods is another important function of supply chain management. It accelerates the return mechanism through automated process on both buy and sell side of business. Businesses are able to faster initiate the process of refund or claims with distributors, suppliers and insurance companies.