If your supply chain is struggling with new demand patterns, supply constraints, and logistical challenges, then the answer to your problem is SCM- Supply Chain Management.
What is Supply Chain Management?
Supply Chain Management could be defined as all the processes, including transforming raw materials into finished products. In layman’s terms, it is managing the flow of goods and services.
Delving deeper into the functioning of SCM, it could be perceived as the efforts of suppliers to develop and implement supply chains as efficiently and economically as possible.
How Does SCM Work?
SCM links the three key stages- production, shipment, and distribution of the product, saving excess costs and delivering the product to the consumer faster. Usually, it’s undertaken by administering a hold on internal inventories and production, distribution, sales, and the inventories of company vendors.
Despite supply chains existing for decades, limited companies and organizations have taken the opportunity to add value to their operations.
What Are The Main Aspects of SCM?
SCM is classified into five aspects (Planning, Sourcing, Manufacturing, Delivering, and Returning) based on the logistics Managers aim to minimize costs and maximize productivity and efficiency.
Planning as an aspect, is induced to achieve the best results from SCM. It involves forecasting future needs and acting accordingly. For instance, raw materials needed for each stage of manufacturing could be considered a part of planning. Established companies usually depend on ERP system modules for the aggregation of plans.
Sourcing is the process of working with vendors for a consistent supply of raw materials through the manufacturing process. SCM processes banks on their relationships with the suppliers due to the numerous sourcing requirements involved in each procedure. The SCM sourcing takes steps to ensure the credibility of the supplier before building a relationship to comprehend whether the supplier might be able to comply with their needs.
Manufacturing is the heart of SCM as it creates a product which is the ultimate goal of the process. It involves assembling, testing, inspecting, and packaging while ensuring minimum wastage of resources which may pose a hurdle for the company.
Delivering is the stage that assesses the interaction between the customer and the product. It involves subtasks such as ensuring timely, safe and inexpensive delivery of products. It’s always a safe option to have a diversified distribution method to combat the problems arising from the sole distribution channel.
Returning is the concluding stage of the process entailing support for product and customer returns. Also known as reverse logistics, it acts as a sign for the company to reconsider its capabilities and decisions in its earlier stages and search for remedies.
Types of Supply Chain Models
As discussed earlier, Supply Chain differs in each establishment due to their diverse goals, ambitions, and constraints. However, there are six primary models generally adopted by the company to guide its supply chain processes- The Continuous Flow Model, Agile Model, Fast Model, Flexible Model, Efficient Model, and Custom Model.
Supply Chain Management is essential to companies as it boosts their zeal to achieve their objectives. Citing an example, reducing the risk of recalls and lawsuits could assist in building a strong consumer brand.
Additionally, SCM offers several opportunities for organizations to improve their profit margins. It is the idea that nearly every product in the market is the result of consistent efforts by every organization to establish a supply chain that has proven beneficial.
Implementing a supply chain and managing it skillfully can undoubtedly solve numerous problems in any supply chain. Leveraging technology, data visibility, and proper demand planning may transform your failing supply chain into an efficient and competitive one.