Supply Chain Management can be defined as the management of the flow of products and services, which begins from the origin of products and ends at the product’s consumption. It also comprises movement and storage of raw materials that are involved in work in progress, inventory and fully furnished goods.
The main objective of supply chain management is to monitor and relate production, distribution, and shipment of products and services. This can be done by companies with a very good and tight hold over internal inventories, production, distribution, internal productions and sales.
In the above figure, we can see the flow of goods, services and information from the producer to the consumer. The picture depicts the movement of a product from the producer to the manufacturer, who forwards it to the distributor for shipment. The distributor, in turn, ships it to the wholesaler or retailer, who further distributes the products to various shops from where the customers can easily get the product.
Supply chain management basically merges the supply and demand management. It uses different strategies and approaches to viewing the entire chain and works efficiently at each and every step involved in the chain. Every unit that participates in the process must aim to minimise the costs and help the companies to improve their long-term performance, while also creating value for its stakeholders and customers. This process can also minimise the rates by eradicating the unnecessary expenses, movements and handling.
Here we need to note that supply chain management and supply chain event management are two different topics to consider. The Supply Chain Event Management considers the factors that may interrupt the flow of an effective supply chain; possible scenarios are considered and accordingly, solutions are devised for them.
Supply Chain Management – Advantages
In this era of globalisation where companies compete to provide the best quality products to the customers and satisfy all their demands, supply chain management plays a very important role. All the companies are highly dependent on effective supply chain process.
Let’s take a look at the major advantages of the supply chain. The key benefits of supply chain management are as follows:
• Develops better customer relationship and service.
• Creates better delivery mechanisms for products and services in demand with minimum delay.
• Improvises productivity and business functions.
• Minimises warehouse and transportation costs.
• Minimises direct and indirect costs.
• Assists in achieving shipping of right products to the right place at the right time.
• Enhances inventory management, supporting the successful execution of just-in-time stock models.
• Assists companies in adapting to the challenges of globalisation, economic upheaval, expanding consumer expectations, and related differences.
• Assists companies in minimising waste, driving out costs, and achieving efficiencies throughout the supply chain process.
These were some of the major advantages of supply chain management. After taking a quick glance at the concept and advantages of supply chain management, let us take a look at the main goals of this management.