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Supply Chain Management

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Kritika Thakur
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8 views4 pages

Supply Chain Management

Uploaded by

Kritika Thakur
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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What Is Supply Chain Management (SCM)?

Supply chain management is the management of the flow of goods and


services and includes all processes that transform raw materials into final
products. It involves the active streamlining of a business's supply-side
activities to maximize customer value and gain a competitive advantage in
the marketplace.

Most Important Benefits of Supply Chain Management are:

1. Higher Efficiency Rate:


When your business is able to incorporate supply chains, integrated logistics, and
product innovation strategies, you’ll be in a great position to not only predict demand as
well as to act accordingly. And this is, without any doubt, is one of the main benefits of
supply chain management. Why? When your business implements supply chain
management systems, it will be able to adjust more dynamically to the fluctuating
economies, emergency markets, and shorter product life-cycles.

2. Decrease Cost Effects:


One of the advantages of supply chain management is the costs decrease in different
areas. The most important ones are:

 Improves your inventory system;


 Adjusts the storage space for finished goods which eliminates damage
resources;
 Improves your system’s responsiveness to the actual customer’s requirements;
 Improves your relationship with both distributors and vendors.

3. Increases Output:
Communication improvement is among the main advantages of supply chain
management. This adds up to the coordination and collaboration with shipping and
transport companies, vendors, and suppliers.

4. Increases Your Business Profit Level:


When you place your business open to the new technologies and an improved
collaboration within the different areas, you can be sure that this will ultimately increase
your business profit level.

5. Boost Cooperation Level:


When we’re talking about the most successful businesses right now, one of the things
they all have in common is the communication. In fact, when there is a lack of
communication, your vendors and distributors have no idea about what’s going on. So,
this is definitely one of the main advantages of supply chain management. Plus, when
you also open your doors and embrace technology, you can also take advantage of the
fact that people don’t even need to share the same space in order to be a true
communication.
The communication among the different areas of your business will allow you to have
faster access to forecasts, reporting, quotation, statuses, among many other plans in
real time.
6. No More Delays In Processes:
Benefits of supply chain management includes the fact that through communication, you
can actually lower any delays in processes. Since everyone is aware of what they’re
doing as well as what others are doing, this will mitigate any late shipments from
vendors, logistical errors in distribution channels, and hold-ups on production lines.

7 better ability to predict and meet customer demand;


8 better supply chain visibility, risk management and predictive capabilities;

9 less product waste;

10 improvements in quality;

11 increased sustainability, both from a societal and an environmental standpoint;

12 improvements in cash flow; and

Five stages of supply chain management


Supply chain management can be broadly categorized into five steps or areas:

Plan. Using supply chain analytics and materials management features,


organizations create strategic plans to meet customer demand for product.

Source of raw materials. Organizations identify and select vendors that can
supply raw materials in a streamlined and efficient way according to agreements.
Supply chain collaboration starts at this stage and is important throughout the
supply chain management process.

Production. In this stage, products are manufactured. It includes scheduling the


production, testing, ensuring compliance requirements are followed, packing,
storage and release. Multiple machines are likely to be involved, especially for
larger companies.

Deliver. The delivery stage pertains to logistics and focuses on getting finished
goods to consumers, in whatever manner of transportation is needed.

Return. The return stage includes all product returns, including defective products
and products that will no longer be supported. This stage also includes elements
from other stages, including inventory and transportation management.
What is the supply chain management process?
The supply chain management process is composed of four main parts: demand

management, supply management, S&OP and product portfolio management.

1. Demand management
Demand management consists of three parts: demand planning, merchandise
planning, and trade promotion planning.

 Demand planning is the process of forecasting demand to make sure products can
be reliably delivered. Effective demand planning can improve the accuracy of
revenue forecasts, align inventory levels with peaks and troughs in demand, and
enhance profitability for a particular channel or product.
 Merchandise planning is a systematic approach to planning, buying, and selling
merchandise to maximize the return on investment (ROI) while simultaneously
making merchandise available at the places, times, prices, and quantities that the
market demands.
 Trade promotion planning is a marketing technique to increase demand for products
in retail stores based on special pricing, display fixtures, demonstrations, value-
added bonuses, no-obligation gifts, and other promotions. Trade promotions help
drive short-term consumer demand for products normally sold in retail environments.

2. Supply management
Supply management is made up of five areas: supply planning, production

planning, inventory planning, capacity planning, and distribution planning.

Supply planning determines how best to fulfill the requirements created from the

demand plan. The objective is to balance supply and demand in a manner that

achieves the financial and service objectives of the enterprise.

 Production planning addresses the production and manufacturing modules within a


company. It considers the resource allocation of employees, materials, and of
production capacity.
 Production/supply planning consists of:

 Supplier management and collaboration


 Production scheduling
 Inventory planning determines the optimal quantity and timing of inventory to align it
with sales and production needs.
 Capacity planning determines the production staff and equipment needed to meet
the demand for products.
 Distribution planning and network planning oversees the movement of goods from a
supplier or manufacturer to the point of sale. Distribution management is an
overarching term that refers to processes such as packaging, inventory,
warehousing, supply chain, and logistics.
3. Sales and operations planning (S&OP)

 Sales and operations planning (S&OP) is a monthly integrated business


management process that empowers leadership to focus on key supply chain
drivers, including sales, marketing, demand management, production, inventory
management, and new product introduction.
 With an eye on financial and business impact, the goal of S&OP is to enable
executives to make better-informed decisions through a dynamic connection of plans
and strategies across the business. Often repeated on a monthly basis, S&OP
enables effective supply chain management and focuses the resources of an
organization on delivering what their customers need while staying profitable.

4. Product portfolio management


Product portfolio management is the process from creating a product idea creation to
market introduction. A company must have an exit strategy for its product when it
reaches the end of its profitable life or in case the product doesn’t sell well.
Product portfolio management includes:

 New product introduction


 End-of-life planning
 Cannibalization planning
 Commercialization and ramp planning
 Contribution margin analysis
 Portfolio management
 Brand, portfolio, and platform planning

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