Supply Chain Management is the activities concerning the functionality of a supply chain. As established in a previously article, supply chains are the network that connect suppliers and buyers.
Due to its vital aspect in business, it’s necessary to keep supply chain healthy and flowing, avoiding loses and prejudices. But for this, you need a complex system that will handle the whole operation.
That system is the supply chain management, and it involves optimizing the workflow to be fast and efficient. Let’s discuss more about supply chain management.
What is Supply Chain Management?
Basically, management concerns the processes of cost reduction in the company’s budget, seeking to maximize efficiency and the whole strategic aspect of the end-to-end operation on a supply chain.
Every business that deals with any kind of manufacturing should take supply chain management as a vital aspect of their daily planning. Theses processes involve managing movement of materials and customer experience.
It’s important to maintain a good supply chain management because it is what sustain competitive advantage. As the success of manufacturing is the success of the supply chain.
So, the supply chain management is responsible for points such as:
- Designing the supply chain.
- Planning operations.
- Executing services.
- Delivering goods.
- Ensuring customer satisfaction.
Finally, it’s also function of management to register data and use it to increase productivity in next cycles. Accurate information can save money and reduce unnecessary errors and expenses.
Components of a Supply Chain Management
So, as you can see, supply chain management encompass the whole operation, but let’s talk about some of the most important aspects and what they mean.
The first step of a supply chain settlement, the planning needs to contemplate each part of the project. You need to determine needs, costs, margins of profit, professionals required.
Also, you need to establish what kind of supply chain will suit best for your needs. Establishing metrics of evaluation and the pros and cons of each policy you can adapt.
Next, you need to calculate the resources that will be directed to the supply chain, that includes money expend, time of execution and partnerships involved in the process.
After you have all the intel you need to start functioning, you can look for sourcing, which means finding the right suppliers that can break even on money expenses and quality of materials.
Finding the best suited supplier is a key aspect of competitiveness. After finding the right suppliers, you can start managing the relationships with the best ones.
In that stage, you already have the items you ordered from suppliers and is ready to start producing. Manufacturing involves assembling items, testing, packing and storing production.
On that stage you can include transportation and warehouse. So, you need to process customers’ orders, schedule deliveries, and finally distribute items accordingly to the needs.
Finally, the feedback step is fundamental to keep increasing efficiency of production. You need to evaluate customers perceptions, see if any error was made during the process and establish metrics that can help you moderate operations.
The activity of management is what keep supply chains working and getting better. With a well-established system, backed by data, trained professionals and planning can lead to a raise in profit and efficiency.
Also, you can improve customer satisfaction, reduce operating costs, improve cash flow, avoid errors and mistakes, have a better inventory and relationships with suppliers.
In conclusion, its fundamental to keep your business operating and competitive, while influencing others and growing on your specific market.