Get to Know What Supply Chain Management Is for Companies

For a company, implementing supply chain management is crucial. With supply chain management, production and distribution costs can be significantly minimized. Learn what supply chain management is for companies with the explanation below.

What is Supply Chain Management? Supply chain management, or SCM, is a series of activities that include planning, organizing, and scheduling the flow of products from procurement to distribution to consumers. With SCM, the supply chain is organized to operate in the most effective and efficient way possible.

To gain a deeper understanding of SCM, let's explore some definitions from experts below:

Stevenson According to Stevenson, supply chain management is a strategic coordination of the supply chain. The goal is to combine the management of supply and demand.

Russel and Taylor Russel and Taylor describe supply chain management as a process of managing information, products, and services across the entire network. This includes the network between customers, suppliers, and the company.

Kalakota (2000) Kalakota describes supply chain management as an 'umbrella process' covering production processes to distribution processes leading to the consumer in a structured manner.

The Purpose of Supply Chain Management The purpose of supply chain management is to enhance the efficiency of coordinating supply and demand. SCM can also effectively and efficiently resolve issues. Common problems in the supply chain include procurement management, customer relationship management, and determining the level of outsourcing.

The strategic goal of SCM is to dominate the market or at least sustain business operations. For a company to dominate market competition, the supply chain must deliver affordable, high-quality, timely, and varied products.

Functions of Supply Chain Management There are three main functions of supply chain management that you need to know. Learn about what supply chain management is for companies and its functions.

Physical Functions Production is one example of the physical function of the supply chain. This includes processing raw materials and the costs involved in all stages of the process.

Mediation Functions For raw material procurement, companies need to work with suppliers. Additionally, during the delivery of products to customers, companies also need a distributor. These reasons illustrate the mediation function of supply chain management.

Cost Functions Costs related to product design, market research, and other operational expenses become easier to monitor and review.

Processes in Supply Chain Management The concept of supply chain management encompasses a wide range of activities. To help you understand it more easily, learn about what supply chain management is for companies below:

Planning (Information) Preparing a plan can help streamline the flow of supply chain management. This process may include collecting data related to the supply chain.

Additionally, this stage can be done by the company to minimize risks that may occur from the production process to product distribution to customers.

Source and Inventory Supply chain management strategies bridge the gap between companies and suppliers. Companies want to produce high-quality products for consumers. Therefore, a selection process for suppliers is necessary. Companies must differentiate between more credible suppliers.

Production Not only does it involve processing raw materials into finished goods, but this component also includes testing and packaging. To create a good impression, companies must choose high-quality raw materials and provide appropriate packaging to offer to customers.

Transportation and Shipping Companies need to determine what type of transportation to use for shipping supplies and products. In this case, a supply chain manager must manage the distribution network well to ensure all processes run smoothly.

Returns Companies must handle customer complaints about product returns. Additional services for customers with product issues are one of the things companies should provide.

Examples of Supply Chain Management in Product Companies Implementing supply chain management is more evident in companies offering finished goods products. For example, if you run a snack food company, the team responsible for the supply chain should plan product designs, flavor variants, packaging, and decide on the location and strategy for distributing the snacks.

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This concludes the explanation about what supply chain management is for companies. With thorough supply chain management strategies, companies can endure for a long time.