Supply Chain Management (SCM) is an important part of every organization, whether small or large. SCM is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage, according to Robert Handfield, Ph.D. SCM also deals with the movement and storing of materials needed to create a product, as well as inventory management, and finished goods from where they were created to who they go to.
According to SCM experts, it's also defined as the design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally. The other area that SCM is related to is operations, logistics, procuring, and information technology.
If these areas are integrated correctly, the organization is then able to function at optimal capacity in order to provide and distribute various products and materials.
SCM is a Necessary Part of Business
Essentially, the world can be viewed as one large supply chain. Consumers and producers are constantly communicating with each other, and a product goes through many hands before reaching its final destination. SCM deals with major issues such as the growth of multinational corporations, partnerships, global brand expansion and outsourcing.
Everything that affects the world affects SCM, from fluctuating gas prices to environmental concerns. SCM is the single most important business discipline in the world today.
SCM Integration Importance
SCM is necessary for the foundation of all societies. Supermarket operations for example, deal with a wide variety of producers, and are essential to providing goods to consumers. If a supermarket industry does not have a good supply chain management branch, this can affect a wide variety of citizens who need a supermarket in order to survive.
An effective supply chain that is able to meet the needs of both producers and consumers is one that takes an integrated approach towards management. If operations in multiple locations are cooperating and communicating, this can make supply chains much more efficient. Logistics are also much easier to observe and manage when every part of an integrated supply chain is providing inventory data and procurement data that can be backed by more than one entity.
SCM in Business
Supply chain management has a huge impact on business. Good SCM can directly improve customer service. The right product and the correct quantity have to be delivered in a timely manner, to appease both producers and distributors. Consumers want to be able to know the location they have to go to in order to obtain the goods that they want.
These consumers also want a high standard of customer support. If goods are not distributed on time, supply chain management branches of a company have to assure them that they will get their products as soon as possible. SCM also has a huge impact on the bottom line of a company.
Large corporations value good supply chain managers because they improve the efficiency of plants, warehouses, and transportation vehicles in a supply chain. Cash flow is directly increased because the delivery of a product is in a timely manner, and consumers are able to purchase their goods.
The Supply Chain Momentum
Supply chain management streamlines everything from product flow to unexpected natural disasters. Logistics of a large company are managed completely by supply chain managers. With an effective SCM, organizations have the ability to diagnose problems and disruptions correctly. Many organizations lack in the risk management sector due to not being able to effectively deal with potential problems.
Organizations that want to achieve sustainability over a long period of time will be wise to invest in a dynamic and advanced supply chain management director. There are many potential saving opportunities that become available once an effective SCM is integrated into a company or network of companies.