What is Supply Chain Management?
Supply Chain Management is a systematic and strategic management of the product from raw material to finished goods. SCM helps the company to maximise their productions. SCM is also called the art of management by providing the Right Product, At the Right Time, Right Place and at the Right Cost to the Customer.
Nature of Supply Chain Management
Formulate effective plan
Supply chain managers focus on creating effective plans and strategies for ensuring proper functioning. They develop well-defined plans by doing various analysis and forecasting that leads to deliver better results within the organization.
Acquire raw materials
Availability of sufficient amount of raw materials at all is must for the uninterrupted functioning of the business. Supply chain managers identify cheap sources of raw materials and ensure timely attainment of all materials in the right quantity and quality.
Supervise production process
Supply chain management supervises the whole production processes of business for deriving optimum results. These managers monitor all activities and ensure that each of the resources is efficiently utilized with minimum wastage.
Manages delivery of goods
Supply chain management is concerned with the regulation of delivery and logistics activities of the organization. It works towards timely delivery of goods and services by bringing proper coordination in between distinct transportation channels and warehouses.
Proper return system
It facilitates a proper return mechanism by providing an automated process on both buy and sell-side of the business. All refunds and claims of customers, distributors and suppliers are settled instantly via this process. Super chain management ensures proper handling and inspection of defective goods.
Objectives of Supply Chain Management
Reduce operating expenses
Supply chain management lays emphasis on bringing down the operational expenses of a business. It reduces all types of business expenses like the cost of purchase, production and delivery by providing a proper supply chain. Holding period of both raw materials and finished goods is reduced by facilitating a smooth flow of raw materials in between the supplier and a company and movement of finished products between company and customers. This avoids losses and minimizes the overall operating cost of business.
Enhance customer satisfaction
Boosting the overall customer experience with business is another major role by process of supply chain management. Proper analysis of customer analysis is done before formulating any production strategy which leads to production of right product. It keeps an eye on all activities within the organization and checks the quality of products to ensure whether they meet desired standards or not. Providing right quality of products at right price enables in providing better satisfaction to customers.
Improve distribution channel
Supply chain management provides an efficient supply chain to business which accelerates the whole process of distribution. Proper coordination in between various transportation channel and warehouses is achieved for facilitating faster movement of goods. This way the whole distribution system is enhanced which enables in delivering product in right time and at right location.
Strengthen financial position
It strengthen financial status of business by attaining better efficiency in its process. Supply chain manager prevents any shortage of materials and focuses on cutting any excessive costs. Any chance of funds blockage in inventories is avoided by facilitating a speedy movement of goods. Optimum funds are always maintained by managers within the business which leads to strengthen the financial status.
Regulate proper inventory
Maintaince of proper inventory is must for continued operations of business. All inventories such as raw materials, spare parts and finished product are properly recorded by managers for maintaining a right stock always. Any situations like under stocking or over stocking is avoided that leads to smooth functioning of business organization.
Promotes better coordination
Supply chain management aims at establishing a better coordination among all stakeholders of business. Proper channel is developed for easy communication of employees, customers and suppliers with organization. Manager can easily direct their employees and employees can also contact their supervisors via the established channel in case of any problem erupts. It promotes exchange of information among all parties and assist in bringing proper coordination within the organization.
Scope of Supply Chain Management
Minimises Operating Cost
Supply chain management focuses on reducing the overall operating cost of the organisation. It aims at bringing efficiency and raising the profitability of organisations. By developing a proper chain it brings down the purchasing cost, production cost and delivery cost. It enables smooth flow of raw materials from the supplier to an organisation which reduces the holding period of materials with the supplier and avoids any losses due to delay in production. Similarly, companies are not required to hold on expensive inventories for a longer time and distribute quickly through the supply chain.
Boosts Customer Service
Supply chain management helps in providing better service to customers. All production strategies are framed in accordance with requirements of customers to manufacture right product. It properly anticipates the demands of customers before initiating the production. Supply managers monitor all operations of business and ensure that quality products are produced using best combination of resources. Right product available to right cost provide better satisfaction to customers. This will boost their confidence level in company’s products.
Enhance Financial Position
Management of supply chain has an effective role on the financial position of business. It improves the efficiency of the organisation, cut down the excessive cost and avoids any shortage. Supply chain manager bring down the cost by reducing the use of fixed assets like plants, transportation vehicles, warehouses etc. Proper supply chain results in speedy flow of products which minimises the blockage of funds in inventories. It ensures that optimum funds are always available which helps in improving financial position.
Distribution of products at the right time and the right location is a complex task for every organisation. Supply chain management accelerated the overall distribution system of an organisation. It coordinates with various transportation channels and warehouses for attaining faster movement of goods. Supply chain managers ensure that all products get delivered at the right location within the time limit. By developing a proper network for movement of goods it has to ease the whole distribution system.
Bring coordination among partners
Proper coordination among all partners of business increase productivity and profitability. It develops a proper channel through which employees, supplier and customers can easily interact with business. Managers can easily control the activities of their subordinates by communicating them all the required information.
Employees in case of any problem or error can contact their supervisors. Customers can also access their brands for any information through self-portals which are developed as a part of the customer support system. This enables a better exchange of information and brings coordination among partners.
Maintaining an optimum inventory is a must for uninterrupted operation of every business. It keeps record of all inventories that is raw materials, spare parts and finished goods. Supply chain managers ensure that the proper amount of inventory is always maintained within the organisation. They work towards avoiding situations like understocking or overstocking. Supply chain managers frame proper strategies for procuring, producing and maintaining all inventories as per requirements.
Supply chain management works on strengthening the relationships between business and suppliers. It tracks and records every interactions or transaction with the suppliers. Proper supply chain enables timely procurement of all required raw materials from suppliers. It develops a proper network through which suppliers and business can easily interact. Supply chain management solutions provide a self-service portal through which suppliers can contact the company in case of any issues or problems.
Read More: Objective of Supply Chain Management