Supply chain management (SCM) is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. Supply chain management involves coordinating and integrating these flows both within and among companies.
Supply chain management software includes tools or modules used to execute supply chain transactions, manage supplier relationships, and control associated business processes.
Supply chain management flows can be divided into three main flows:
- The product flow
- The information flow
- The finances flow
The product flow includes the movement of goods from a supplier to a customer, as well as any customer returns or service needs. The information flow involves transmitting orders and updating the status of delivery. The financial flow consists of credit terms, payment schedules, and consignment and title ownership arrangements.
The purpose of supply chain management is to improve trust and collaboration among supply chain partners, thus improving inventory visibility and the velocity of inventory movement.
BENEFIT OF SCM
- Reduce uncertainty along the chain
- Proper inventory levels in the chain
- Minimize delay
- Eliminate rush (unplanned) activities
- Provide good costumer service
FIVE BASIC COMPONENTS OF SCM:
- Plan , Every company needs a strategy on how to manage the resources in order to achieve their customers demand for their products and services.
- Source, The managers need to develop a set pricing and delivery system in the supply chain.They can also put processes for managing their goods and goods inventory, for example; receiving shipments.
- Make, In manufacturing the supply chain manager should always schedule the activities that are needed for the production, packaging, testing and preparation for delivery.
- Deliver, In this case companies coordinate receipts of orders, pick carriers to get products to customers and develop a network of warehouses.
- Return, The planners should create a flexible and responsible network for receiving a flaw and excess products sent back to them (from customers).
WHY COMPANY NEED SCM?
Supply Chain Management (SCM) is an important part of every organization, whether small or large. SCM is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage.
- SCM is necessary part of business
Consumers and producers are constantly communicating with each other, and a product goes through many hands before reaching its final destination. SCM deals with major issues such as the growth of multinational corporations, partnerships, global brand expansion and outsourcing.
2. SCM integration important
SCM is necessary for the foundation of all societies. Supermarket operations for example, deal with a wide variety of producers, and are essential to providing goods to consumers. If a supermarket industry does not have a good supply chain management branch, this can affect a wide variety of citizens who need a supermarket in order to survive.
3. SCM in business
Supply chain management has a huge impact on business. Good SCM can directly improve customer service. The right product and the correct quantity have to be delivered in a timely manner, to appease both producers and distributors. Consumers want to be able to know the location they have to go to in order to obtain the goods that they want.
The key supply chain processes stated by Lambert (2004) are:
- Customer relationship management
- Customer service management
- Demand management style
- Order fulfillment
- Manufacturing flow management
- Supplier relationship management
- Product development and commercialization
- Returns management
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