Supply chain management is an approach to managing the flow of materials, information, and finances between the point at which raw material is extracted or the product is manufactured and the point at which the product is sold to the end customer.
It is a system-wide approach to cover all of the processes necessary to get a product or service from the source of supply through to the end user.
What is Supply Chain Management?
Supply chain management is a complex system of activities and processes. Some of the activities involved in supply chain management can be grouped into the following categories:
- Procurement activities: purchasing and procurement, inventory management and supply planning, and supplier relationships.
- Production, distribution, and service activities: design, engineering, production, inventory control, warehouse management, logistics, transportation, order management and customer service.
- Information activities: data collection, information processing and reporting.
You know you need a supply chain management (SCM) system for your business. But picking the right one for your company can be difficult. There are all sorts of supply chain management (SCM) software solutions. These days, you can even find some open-source supply chain management software that you can use for free.
But if you’re not careful, you could end up with a supply chain management (SCM) solution that doesn’t work with your company. So how do you pick the right one, and how to make supply chain management effective?
How to have effective supply chain management?
If you are planning to set up your own business, you must have a clear idea about various aspects of your business. One of the major aspects is supply chain management. It is a process of planning and managing the supply chain of your business.
Supply chain management ensures that your company gets the right raw materials and resources at the right time to produce the right kind of products or services. This chain includes the suppliers, manufacturers, logistics and suppliers, warehousing and distribution, and retailers.
Good supply chain management is a vital aspect of running a successful business. A supply chain refers to the network of people, equipment and transportation used to move products from one place to the next.
It’s important to find dependable suppliers because, after all, you’re in the business to make a profit and not lose money. On top of all of this, supply chain management will help you build business relationships with others in your industry. You don’t have to go it alone, so look for ways to partner up with other businesses and work together.
Suppliers or vendors are considered a vital component of supply chain management. Businesses are so dependent on the supply chains that they have established that they have to make sure that they have the right suppliers in place.
If a business has the wrong suppliers, it will find itself in the middle of a supply shortage. Suppliers are sometimes referred to as vendors. Suppliers can be found in various industries, and they include third-party service providers and manufacturers.