Supply Chain Management (SCM) is a buzzword that everyone seems to be talking about. However, it is more than a buzz, it is a vital space that keeps everything around the world moving. For instance, your chosen product embarks on a long journey, across cities, sometimes even countries, shuttling between multiple warehouses, before it is delivered to you. Supply chain management is the story of this journey and supply chain management software helps with the process. It allows companies to effectively source raw materials and control product cycles automating the process and centralizing data.
What is Supply Chain Management?
Supply chain management is a process of integrating supply and demand management, not only within the organization but also across various members and channels in the supply chain so they work together efficiently and effectively to deliver the products. The supply chain management system has 5 components.
1. Planning
To meet customer demands, supply chain managers need to plan. This includes demand planning, merchandise planning, and trade promotion planning. Demand planning is forecasting the demand ensuring that products are delivered on time. Merchandise planning is the approach to buying and selling the products to maximize ROI and making the products available in the market. Trade promotion planning is a marketing technique to increase demand for products in retail shops.
2. Sourcing
Supply chain managers must manage the processes for ordering, receiving, managing inventory, and authorizing invoice payments for suppliers. This is done by selecting suppliers who will provide goods, raw materials, or services that create the product. This not only includes creating the contracts that govern the suppliers but also managing and monitoring existing relationships.
3. Making
Supply chain managers need to coordinate all the steps involved in producing the product. This includes evaluating and receiving raw materials, fabricating the product, quality testing, and packaging. Generally, businesses evaluate the quality, production output, and employee productivity to ensure overall standards are maintained.
4. Delivering
Ensuring the products reach the customers on time is achieved through logistics. This includes synchronizing the orders, scheduling delivery, dispatching, invoicing, and receiving payments. Usually, a fleet of vehicles is managed to ship the products, from containers bringing an overseas product to fleet trucks and parcel services handling last-mile delivery. In some cases, organizations outsource the delivery process to other organizations that can oversee special handling requirements or home delivery.
5. Returning
Supply chain managers also need to develop a network that supports returning of products. In certain cases, this may include re-producing a defective product or scrapping it. In others, it simply means returning the product to the warehouse. The foundation for each of these components is a robust network of supporting processes that efficiently monitor the information across the supply chain and guarantee adherence to laws and regulations and supply chain management software comes handy. It automates the entire process allowing supply chain managers to error-free supply the products as per their demand.
Why is Supply Chain Management Important?
Supply chain management is essential for organizations as it offers several benefits. This includes improved quality control, a high-efficiency rate, keeping up with the demand, reduce overhead costs, increase output, and improved cash flow. However, poor supply chain management can result in expensive delays, quality issues, or put an organization’s reputation at stake. Technology improvements have unlocked huge possibility for supply chain management, enabling supply chain managers to work closely and in real-time and all this is possible with supply chain management software. Now that you know what is supply chain management and what risks it provides if not done appropriately, it is time that you automate the process and get peace of mind. Engear can help you with that.
