Supply Chain Management: How Does SCM Work?

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Be it upstream or downstream, supply chain management helps to manage the information, materials, Finance and all aspects of business processes. Let us discuss what Supply Chain Management is and how SCM works?

Be it upstream or downstream, supply chain management process, system and tools help to manage operations, information, materials, finance and all aspects of business processes. Let us discuss what Supply Chain Management is and how SCM works?

What is Supply Chain Management (SCM):

The strategic and systematic co-operative effort of the various business functions across businesses or within an organization or among multiple organizations to improve the overall and long term performance of the organization is popularly defined as supply chain management.

How Does Supply Chain Management (SCM) process work?

There are certain key elements that rule global supply chain management. Let us have a quick look on some of these core elements of Supply chain management system.

Product Movement:

The movement or work flow of the product plays the vital role in designing SCM model. Movement of the product needs to be managed well to achieve success in any business. Timely movement of a product from one unit to another, appropriate quality check at each point and quick delivery are the key components to completely satisfy customer’s needs. SCM must help to define the process of product movement.

Information Sharing and Communication:

Inappropriate communication can lead to disaster in businesses. SCM model should be designed such that it has an appropriate flow of information movement from one point to another while conducting business.

Timely Order to Delivery:

Supply chain management model must meet the deadlines well from the beginning till the end. Organization’s success is solely depending on how successful the delivery of the product is when it reaches the customer’s hands. Right from the order processing to manufacturing, receiving, quality checks and until delivery to the customer, SCM model must be fine tuned appropriately.

Service after delivery:

Performance management is another important aspect to be considered to gain long term success. SCM model should have a system to regularly conduct performance reviews, quality checks after delivery so that the service after delivery is well taken care of. The continuous business growth needs to be considered while designing supply chain management system.

Finance:

Supply chain management also includes managing finances of the organization. Accounts payable, inventory management, billing accuracies, possibilities of sharing costs across facilities are the few key finance activities that need to be defined well in the SCM model.

Integrated Supply Chain Management:

Strategic integration of various functions within the organization or stakeholders is essential to manage the work flow and in turn the success of the organization. SCM model must integrate the functions and stakeholders well so that the long term goal of the organization can be achieved.

Supply Chain Management can bring in lot of benefits to the organization and help to fulfill its long term goal in turn to achieve business success.

Conclusion

As you can see, supply chain management is quite involved. The two core ideas of supply chain management involves every product that reaches an end user represents the cumulative effort of multiple organizations. These organizations are referred to collectively as the supply chain. And this cumulative effort involves everyone to get the product out to the end user.

Secondly, you must realize that supply chain management involves more than just the business or company. The entire supply chain is all about getting the products to the final customer.

It is so important that the entire organization or company understands that this supply chain management is not only about the physical flow or products, but also that information flows smoothly.

Resources:

Supply Chain Management, Wikipedia

Andrew Flintoff, Supply Chain Management Framework, Associated Content from Yahoo

THOMAS CRAIG, President LTD Management, Supply Chain Management, ltdmgmt.com

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Suman Verma
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Suman Verma
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