Supply chain management refers to the process of monitoring and then optimizing a company’s product/service production and distribution. It deals with improving the efficiency of all the processes associated with/from manufacturing to product marketing to the time when it reaches the end customer.

In addition, supply chain management also involves proper coordination between internal business resources, operations management, and external partners. With SCM, businesses can streamline their activities to eliminate waste efforts, gain a competitive advantage and improve customer value.

Elements of Supply Chain Management

Understanding supply chain management comes with first learning about its elements. Even though it comprises many components, the widely recognized five of them, are as follows:

Planning

In supply chain management, planning refers to forecasting product/service demand and arranging production accordingly. It is done to maintain ideal inventory levels. Maintaining inventory levels helps brands meet customer demand without compromising product availability.

Sourcing

Sourcing is a process that involves identifying ideal suppliers, negotiating contracts, and managing ideal business-supplier relationships. It helps ensure a reliable and constant supply of required raw materials for production.

Manufacturing

Manufacturing refers to the process of streamlining ideal supply chain operations. These are those operations that are needed for the acceptance of raw materials from suppliers and the designing/manufacturing of the products. In addition, it’s also an ideal element to regulate quality control.

Delivery

Delivery includes the transit and distribution of final products ready to meet customer needs. This element of supply chain management also comprises managing the operations of logistics, order warehousing, order fulfillment, and distribution centers.

Returns

Handing returns is all about creating an ideal process and network to manage products that are sent back for being defective. Moreover, it also deals with the handling of expired and excess products. In addition, it also involves management of customer satisfaction and reverse logistics.

Top 5 Approaches to Supply Chain Management

Different businesses use distinct approaches to handle supply chain management. A brand can customize strategies based on factors such as priorities, capabilities, business needs, and budgets. Nevertheless, here are five commonly used approaches to SCM:

Digital Chain Management

In digital chain management, businesses use advanced analytics and technologies like the Internet of Things (IoT), machine learning (ML), and artificial intelligence to address multiple areas of supply chain management, such as logistics, inventory management, and demand forecasting.

Green Supply Chain Management

This approach focuses on eliminating or minimizing the environmental impact of the supply chain while ensuring the fulfillment of a company’s social responsibility. It involves practices like participation in the circular economy and sustainable procurement.

Total Quality Management

The approach primarily focuses on maintaining the highest quality through a supply chain. It is done with the main goal of increasing customer satisfaction. Moreover, this approach also comprises operations such as process standardization and quality management.

Six Sigma

It’s a date-driven approach which aims at eliminating the defects in the supply chain processes, in addition to reducing the variability in them. The approach includes use of statistical methods to determine the cause of error, so as to eliminate them before they draw major setbacks.

Agile Supply Chain Management

The approach puts focus on a company’s quick response to any change in market conditions and customer demand. The ideal associated practices here include fast replenishment, rapid batch product manufacturing and ensuring flexibility in supplier contracts.

Importance of Supply Chain Management

For any business that aims to reach an upward graph of growth, establishing supply chain management is a crucial task. It can help achieve many business goals and objectives that would have been tough to accomplish otherwise. Some of its key importance include:

  • It can help businesses establish ideal collaboration with suppliers that can yield good results in the long term.
  • Supply chain management helps companies get better visibility and control over their finances.
  • Reducing manufacturing costs is important for an organization, and SCM helps ensure that.
  • It helps reduce operational and overhead costs, all while maintaining streamlined supplier collaborations.

Supply Chain Management Software

As the supply chain profession grows, businesses are constantly looking for software options to help them with supply chain management. Some of the widely used options include:

  • Supply chain visibility software
  • Supply chain analytics software
  • Enterprise resource planning systems
  • Supplier relationship management software
  • Demand planning software
  • Transportation management systems
  • Warehouse management systems
  • Order management systems
  • Inventory management software

Using these tools, organizations can automate and streamline processes like sales, logistics, production and procurement. It in-turn reduces the production cost all while improving the efficiency of the process. For example, with TMS and WMS software, companies can maintain ideal cost levels of operations related to transportation and warehousing. Depending upon a company’s business needs, any of these tools can be invested for ideal supply chain management.

Final Words

Supply chain management is an integral element of business, which has a direct impact on its growth. Having a well-established management over supply chain could eliminate any potholes within the business operations. This in-turn could boost overall business growth.