What is Supply Chain Management?

What is Supply Chain Management?

Supply chain management (SCM) holds major importance in the production process of any organization. Since the business world is getting technologized every day, it is important for businesses to maintain a proper supply chain management system in order to make sure a smooth business process.

The idea of supply chain management was first brought up by Keith Oliver in 1982 in an interview conducted by Financial Times. After that, many experts on the subject have added their views and contributions to build the concept of supply chain management as an important part of business growth.

Supply chain management is the management of the goods and services flow in a business organization. It includes all processes from the raw material acquisition to the final output of the production process. It involves all the business supply-side activities and the management process helps to streamline the business activities to maximize the value that can be created for the customer. This increase of customer satisfaction and achieve competitive advantage through an undisruptive supply chain is important for a business to grow.

In simple terms, supply chain management (SCM) is maintaining the flow of goods and services between businesses and locations. It includes moving and storing raw materials, work-in-progress inventory, and finished goods. Apart from that, everything that is related to end-to-end order fulfillment from the starting point to the final output.

 SCM represents the suppliers’ attempt to create, develop and implement a supply chain that is productive, efficient, continuous, and economical.   Usually, the Supply chain management process tries to control or connect the process of production, shipping, and product distribution processes. Proper management of the supply chain helps the business organizations to reduce excess costs and make the products reach the customers faster. This process is done by maintaining a well-controlled internal inventory, internal production process, a prompt distribution process, effective sales, and the company’s vendor inventories.

SCM is developed based on the idea that all the products that are available in the market are there as a result of the enormous efforts put by various organizations that create a supply chain. Even though the concept of supply chain management has existed for a long time most organizations have recently paid attention and adapted to maintain a proper supply chain as it can help to add value to their business operations.

Supply Chain Management Models

There are many supply chain models that have been introduced based on the needs of business organizations.

Agile Model – This model is most suitable for the businesses that deal in producing specialty order products.

Continuous Flow Model – This is the model that is most appropriate for the goods with high demand in the market but with a little fluctuation.

Custom Configured Model – This model provides a custom configuration to the product at the production and assembly levels of the production process.

Efficient Chain Model – This model is most suitable for the businesses that are providing products to the competitive market and require efficiency in the production process.

Fast Chain Model – This model is suitable for products that have a shorter life cycle and are trendy in the market.

Flexible Model – This model provides the freedom for the business to provide for high-demand peak times and low volume movement periods as well.

Supply Chain Operations Reference (SCOR) Model – This model helps to assess the waste of the production process and establish new standards to improve the production process continuously with the aim of having an effective supply chain management system. SCOR model is considered the ideal SCM model for the strategic decision-making process.

The supply chain management practices are widely used in industrial engineering, marketing, system engineering, operations management, logistic management, procurement, and marketing areas.

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