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A Small Intro to Supply Chain Management

What is Supply Chain Management?

Investopedia:

Supply chain management (SCM) is the streamlining of a business’ supply-side activities to maximize customer value and to gain a competitive advantage in the marketplace.

SCM represents an effort by suppliers to develop and implement supply chains that are as efficient and economical as possible.

The 5 step process in Supply Chain Management

Wikipedia:

Supply chain management (SCM) is “the systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole.”

Business Dictionary:

Management of material and information flow in a supply chain to provide the highest degree of customer satisfaction at the lowest possible cost.

SCM requires the commitment of supply chain partners to work closely to coordinate order generation, order taking, and order fulfillment.

They thereby create an extended enterprise spreading far beyond the producer’s location.

7 Principles of Supply Chain Management
7 Principles of SCM

Supply Chain Management in Simpler Terms:

The EFFECTIVE movement and management of materials and information as they flow from their source to the end customer.

Supply Chain encompasses purchasing, manufacturing, warehousing, transportation, customer service, demand planning and supply planning. SCM is a daunting task and calls for proper planning and execution.

OBJECTIVES OF FORECASTING

SCM is the control of the supply chain as a process from supplier to manufacturer to wholesaler to retailer to consumer.

SCM does not  only comprise  the passage of a physical product  through the chain but also any data that goes along with the product (such as order status information, payment schedules, and ownership titles) and the actual entities that handle the product from stage to stage of the supply chain.

There are essentially three goals of SCM:

  1. To reduce inventory
  2. To increase the speed of transactions with real-time data exchange and
  3. To increase revenue by satisfying customer demands more efficiently.

When you think of the world’s most efficient and successful performance and supply chains, what comes to mind? For me it is not Wal-mart  or Pepsi but Mumbai DabbawalasWatch this Video.

The Success of Supply Chain of Dabbawalas in Mumbai –Said to be Six Sigma Compliant

  1. No over-reliance on technology, all manual operations
  2. Create an integrated performance chain, the chief, team leaders and delivery men.
  3. Acute visibility
  4. Keep it simple. Real simple with a color coding to identify where the food has to be delivered and to whom.
  5. Timely Delivery as the shelf life of food is 4-5 hours.

Why is it so important for companies to get products to their customers quickly?

Faster product availability is significant  to increasing sales and there’s a sizeable profit advantage for the extra time that you are in the market and your competitor is not.

The earlier and faster you are in the market, the more orders and market share you enjoy.

The ability to deliver a product faster also can make or break a sale. If two competitive products appear to be equal and one is immediately available and the other will be available in a week, which would you choose?

Supply Chain Management is all about moving goods more quickly to their destination in a strategic and tactical manner.

Supply Chain Management Tomorrow:

The future for Supply Chain Management looks very bright. Two major trends are benefiting Supply Chain Management operations- Customer service focus and  Information technology.

Successful organisations must excel in both of these areas, the fundamental objective being to “ADD VALUE.”

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