What is Supply Chain Management (SCM) and how could it help your business?

A supply chain is the integrated network of individuals, organizations, resources, activities, and technologies involved in the manufacture and sale of a product or service.

A supply chain starts with the delivery of raw materials from a supplier to a manufacturer and ends with the delivery of the finished product or service to the end consumer. SCM oversees each touch point of a company’s product or service, from initial creation to the final sale. A supply chain that can add value through efficiencies or lose value through increased expenses.

Why Supply Chain Management?

There are various reasons that SCM is important to retailers and businesses alike. SCM can boost customer service, reduce operating costs, and improve a company’s financial position. Other benefits include reduced inventory costs, better information sharing between partners, improved process integration, and improved quality. Here is a breakdown of the benefits of SCM.

Boosts Customer Service.

One of the most important aspects of a business is its customer service. The correct product assortment and quantity needs to be delivered to the customer on time and efficiently in order to ensure they are satisfied. Customers also expect products to be serviced quickly if repairs or replacement products are requested/needed. SCM can help ensure that customers are satisfied at all times, which can improve your business’s bottom line.

Reduces Operating Costs.

Supply chain management decreases overall supply chain costs since retailers and manufacturers often rely on supply chain managers to create networks that meet customer service goals at the most affordable rate. Retailers also require supply chains to quickly deliver expensive products in a timely manner in order to limit inventory holds longer than necessary. SCM further reduces production costs because manufacturers require supply chains to deliver materials to assembly plants to ensure proper material supply at all times.

Improves Financial Position

SCM increases profit leverage since supply chain managers help control and reduce the cost of the supply chain, which provides drastic increases in firm profits. Supply chain managers also decrease the use of plants, warehouses, and transportation vehicles within the chain so that fixed assets can be reduced. Lastly, SCM can increase your business’s cash flow given that customers can receive their products faster thanks to supply chain managers

How does Supply Chain Management work?

SCM attempts to centrally control or link the production, shipment, and distribution of a product by managing the supply chain, companies are able to cut excess costs and deliver products to the consumer faster. This is done by keeping tighter control of internal inventories, internal production, distribution, sales, and the inventories of company vendors.

SCM is based on the idea that nearly every product that comes to market results from the efforts of various organizations that make up a supply chain. Although supply chains have existed for ages, most companies have only recently paid attention to them as a value-add to their operations.

In SCM, the supply chain manager coordinates the logistics of all aspects of the supply chain which consists of five parts:

1) The plan or strategy,

2) The source (of raw materials or services),

3) Manufacturing (focused on productivity and efficiency),

4) Delivery and logistics, and

5) The return system (for defective or unwanted products).

The benefits of having a successful supply chain management system for business are various and sometimes it’s hard to understand how and where to start.

If you are seeking assistance and have questions in regards to growing your business with an effective supply chain management solution please feel free to reach out and ABT consultant will be glad to assist.  Call 02 9878 7111 now for a obligation free consultation.