By managing the supply chain, companies are able to cut excess costs and deliver products to the consumer faster. This is done by keeping tighter control of internal inventories, internal production, distribution, sales, and the inventories of company vendors. SCM is based on the idea that nearly every product that comes to market results from the efforts of various organizations that make up a supply chain.
Diann Daniel This definition is part of our Essential Guide: The essential guide to supply chain management best practices Share this item with your network: SCM encompasses the integrated planning and execution of processes required to optimize the flow of materials, information and financial capital in the areas that broadly include demand planningsourcing, production, inventory management and storage, transportation -- or logistics -- and return for excess or defective products.
Both business strategy and specialized software are used in these endeavors to create a competitive advantage. Supply chain management is an expansive, complex undertaking that relies on each partner -- from suppliers to manufacturers and beyond -- to run well.
Because of this, effective supply Supply chain mangement management also requires change management, collaboration and risk management to create alignment and communication between all the entities. However, logistics is a component of supply chain management.
It focuses on moving a product or material in the most efficient way so it arrives at the right place at the right time.
It manages activities such as packaging, transportation, distribution, warehousing and delivery. In contrast, SCM involves a more expansive range of activities, such as strategic sourcing of raw materials, procuring the best prices on goods and materials, and coordinating supply chain visibility efforts across the supply chain network of partners, to name just a few.
Benefits of supply chain management Supply chain management creates efficiencies, raises profits, lowers costs, boosts collaboration and more.
SCM enables companies to better manage demand, carry the right amount of inventory, deal with disruptions, keep costs to a minimum and meet customer demand in the most effective way possible.
Supply chain complexity The most basic version of a supply chain includes a company, its suppliers and the customers of that company.
The chain could look like this: These entities also use services from other providers. The totality of these organizations, which evokes the metaphor of an interrelated web rather than a linear chain, gives insight into why supply chain management is so complex.
That complexity also hints at the types of issues that can arise, from demand management issues, such as a release of a new iPhone that chokes demand for old iPhone cases; to natural supply chain disruptions, such as the halt of transportation in the U.
There are also business software vendors that focus specifically on SCM. A few important areas to note include: Supply chain planning software for activities such as demand management.
Supply chain execution software for activities such as day-to-day manufacturing operations. Supply chain visibility software for tasks such as spotting and anticipating risks and proactively managing them. Inventory management software for tasks such as tracking and optimizing inventory levels.
Logistics management software and transportation management systems for activities such as managing the transport of goods, especially across global supply chains. Warehouse management systems for activities related to warehouse operations.
A number of strategies -- such as lean -- and newer approaches -- such as demand-driven material requirements planning -- may prove helpful. Technology -- especially big data, predictive analyticsinternet of things IoT technology, supply chain analyticsrobotics and autonomous vehicles -- is also being used to help solve modern challenges, including in the areas of supply chain risk and disruption and supply chain sustainability.
And analytics can help determine where to put smart lockers in densely populated areas to cut the number of single-item deliveries and lower greenhouse gas emissions.Supply chain management is the management of the flow of goods and services as well as overseeing the processes that convert original materials into final products.
Supply chain management (SCM) is the broad range of activities required to plan, control and execute a product's flow, from acquiring raw materials and production through distribution to the final customer, in the most streamlined and cost-effective way possible. In essence, supply chain management integrates supply and demand management within and across companies. Supply Chain Management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model. Supply Chain Management (SCM) includes all the activities that must take place to get the right product into the right consumer’s hands in the right quantity and at the right time – from raw materials extraction to consumer purchase.
Supply Chain Management Review is your comprehensive resource for news and information on supply chain management, transportation and warehousing. Supply chain management (SCM) is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage.
It represents a conscious effort by the supply chain firms to develop and run supply chains in the most effective & efficient ways possible. Supply Chain Management (SCM) includes all the activities that must take place to get the right product into the right consumer’s hands in the right quantity and at the right time – from raw materials extraction to consumer purchase.
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