What Does Supply Chain Management Mean?
Supply Chain Management (SCM) is the handling of the flow of goods and services from the raw manufacturing of the product through to the consumption by the consumer. This process requires an organisation to have a network of suppliers (that serve as links in the chain) to move the product through each stage.
Why Is Supply Chain Management Important?
Effective Supply Chain Management improves the financial position of an organisation by delivering value linked to the organisations corporate strategy. Supply Chain Management plays a significant role in customer satisfaction through the delivery of products and services. Good supply chain management is critical at reducing operating costs from Procurement activities, through operations and logistics functions and throughout the whole supply chain. The scale of profitability for large organisations is relative to the management of an organisations supply chain.
Supply Chain Management also has a lesser publicised societal role – ensuring that the basics necessities humans depend on like, food, energy, medicine and modern infrastructure are flowing and available.
What Are the 6 Components of Supply Chain Management?
- Planning – Make vs buy decision to understand whether you will manufacturer or buy domestically or internationally.
- Sourcing - Identifying, evaluating and building relationships with suppliers that will provide goods and services
- Demand/Inventory - Managing inventory and manufacturing schedules to meet consumer demand.
- Production - Ensuring the right volumes and quality of production.
- Warehouse & Transportation - Storing and delivering the product effectively.
- Return of Goods - Ensuring an effective returns process for customer satisfaction.
These six components enable to you provide effective Supply Chain Management.
CIPS Knowledge-related topics, best practice guides and white papers include: Guidance to support the development of organisations supply chain activities, from setting strategy through to operational developments, supporting organisations to build efficiencies into their supply chains to develop supply chains of the future