Supply chain management (SCM) is an essential and critical element that can impact the success ratio of any business.
Let's try and understand what SCM is to know how it can impact businesses.
Supply Chain Management can be defined in simple terms as the process of managing the ecosystem of People, Goods & Materials, and Information & data to efficiently move them from the point of origin to the end-user.
SCM within an organization endeavors is to streamline all the processes related to managing the procurement function with the aim of
• Cost Reduction
• Enhanced Efficiency
• Demand Fulfilment
The SCM process integrates all the internal activities that focus on the product supply to the customer and ensures that all internal bottlenecks are removed to ensure a seamless stream of Information and material.
For this seamless integration to happen, many processes will have to be streamlined. Other areas like inventory planning and management and production planning will have to be resourcefully managed.
This will decrease costs and improve customer service, which will then be further enhanced by integrating with the external supply chains of the suppliers and customers.
A direct cost reduction can power an enhanced customer service model. In today's business ecosystem of cutthroat competition and pricing, companies must be able to offer high quality and cost-effective services to their customers, and at the same time, show a profitable balance sheet to the shareholders.
So, Supply chain management is a complex task, but it can positively impact businesses' bottom lines if executed well.
Some of the significant advantages are:
Quality control concerns are paramount in the minds of companies and customers. The cost of replacing or repairing an individual faulty item is way more than ensuring the right quality product as part of the chain.
For effective sales, a company must sell quality products. For quality products, organizations need to have a strict quality control check over vendors and sub-vendors. By analyzing performance data, companies can partner with the highest-performing vendors and suppliers to maintain strict quality control.
A fluid flow of data and Information across the supply chain is crucial to the success of the business process. SCM enables integrated solutions through technology incorporation that allows for removing pain points and the free flow of Information, providing an aerial view of the end-to-end supply chain.
With the correct data and Information on hand, supply chain leaders can now make better and more informed decisions.
A good supply chain thrives on constant and real-time communication. Supply Chain enables many business practices like Just In time. Practices like Just in Time reduces wastage and manufacturing time and costs, leading to overall cost-efficient production.
An effective Supply Chain impacts the whole manufacturing or retail process and leads to enhanced efficiency in the business process. An effective SCM will not be reactive but proactive. Using the method of predicting, aligning, and responding to SCM will enable a company to reduce wastage and improve bottom lines.