What is Supply Chain Management? Why is it important?
Supply Chain Management (SCM) is an important part of every organization, whether small or large. It is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. SCM also deals with the movement and storing of materials needed to create a product, as well as inventory management, and keeping track of finished goods from where they were created to who they go to.
Modern supply change management encompasses the strategic alignment of end-to-end business processes to realize market and economic value, as well as giving a firm the competitive advantage over their business rivals.
Better Supply Chain Better Business
Supply chain management has a huge impact on business. Good SCM can directly improve customer service. The right product and the correct quantity must be delivered in a timely manner, to appease both producers and distributors. Consumers want to be able to know the location they must go to obtain the goods that they want.
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.
A good supply chain management can improve the efficiency of plants, warehouses, and transportation vehicles. Cash flow is directly increased because the delivery of a product is in a timely manner, and consumers can purchase their goods.
Importance of Supply Chain Management
It is well known that supply chain management is an integral part of most businesses and is essential to company success and customer satisfaction. The main importance of Supply Chain Management are:-
REDUCE OPERATING COSTS
- Decreases Purchasing Cost – Organizations generally prefer quick distributions of costly products and raw materials to avoid expensive inventory
- Decrease Production Cost – A reliable supply chain delivers materials to assembly plants and avoid any costs that may occur due to delays.
IMPROVE CUSTOMER SERVICES
- Right quantity and quality – Customer expects delivery of right quantity and quality of products.
- On-time delivery – Customers expect to receive the correct product mix and quantity to be delivered on time. A reliable supply chain can help in avoiding any bottlenecks and ensure customers get their products in the promised time frame
- Services – After sales services is one of the important aspects in any business. If any kind of problem occur in the product, customer expects it to be fixed quickly. A right supply chain ensures that customers get the service they want.
Supply chain management streamlines everything from product flow to unexpected natural disasters. With an effective SCM, organizations can diagnose problems and disruptions correctly. SCM plays an important role in moving items quickly and efficiently to destination.
With the emergence of competition in current market scenario, an efficient supply chain can give a business the edge that it needs.
Now that you know the importance and benefits of Supply chain management, read how Dell used Supply Chain Management the right way to overcome their problems in the article Role of technology in inventory management