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Supply Chain Management

Three blocks with S C and M on them to represent Supply Chain Management

Supply Chain Management (SCM) is an important aspect of any business that deals with goods and services. It involves the active management of supply chain activities to maximise customer value and achieve a sustainable competitive advantage. This encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management.

SCM involves coordinating and integrating these flows both within and among companies. The ultimate goal of SCM is to ensure that products are produced and distributed in the right quantities, to the right locations, and at the right time while minimising costs and satisfying service requirements.


Supply Chain Management (SCM)

Introduction

Supply Chain Management (SCM) is a crucial aspect of any business that deals with goods and services. It involves the active management of supply chain activities to maximise customer value and achieve a sustainable competitive advantage. This encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management.

What is Supply Chain Management?

SCM involves coordinating and integrating these flows both within and among companies. The ultimate goal of SCM is to ensure that products are produced and distributed in the right quantities, to the right locations, and at the right time, while minimising costs and satisfying service requirements.

Key Components of Supply Chain Management

1. Planning

This is the strategic portion of SCM. Businesses need a strategy for managing all the resources that go toward meeting customer demand for their product or service. A big part of planning is developing a set of metrics to monitor the supply chain so that it is efficient, costs less, and delivers high quality and value to customers.

2. Sourcing

Companies must choose suppliers to provide the goods and services needed to create their product. After suppliers are selected, supply chain managers can schedule the delivery of necessary materials and manage the inventory of goods and materials.

3. Making

This is the manufacturing step. Supply chain managers coordinate the activities required to accept raw materials, manufacture the product, test for quality, package for shipping, and schedule for delivery.

4. Delivering (Logistics)

Also known as logistics, this involves coordinating customer orders, scheduling delivery, dispatching loads, invoicing customers, and receiving payments. It relies heavily on a fleet of transport vehicles to ship goods to customers.

5. Returning

Often overlooked, this part of the supply chain deals with returning products for any reason. The challenge is to handle this efficiently and to create a network that supports speedy, cost-effective returns or disposal of products.

Importance of Supply Chain Management

Efficient SCM provides numerous benefits:

  • Cost Efficiency: Decreases costs through more effective management of inventory, transportation, and logistics.
  • Customer Satisfaction: Ensures products are available when and where they are needed, enhancing customer service.
  • Competitive Advantage: Provides businesses with a competitive edge by reducing production delays and delivering products faster than competitors.
  • Flexibility and Speed: Allows companies to respond swiftly to changes in the market or customer demands.

More Fulfilment Terms

Shipment tracking is the process of locating and monitoring the progress of cargo, packages, or parcels as they move from the sender to the recipient.
KPIs, or Key Performance Indicators, are measurements businesses use to evaluate their success in meeting objectives.

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