What is Supply Chain Management and Why is it Important?

Supply Chain Management (SCM) is a critical aspect of any small or large business. SCM is the active management of supply chain activities to maximize customer value and generate a sustainable competitive advantage. SCM also includes the movement and storage of raw materials, as well as inventory management and the tracking of finished goods from point of origin to point of destination. Whether you love your supply chain or not depends on the operation and the effectiveness of your SCM.

5 Basic Components of Supply Chain Management

1. Planning

In supply management, planning allows for the utmost efficiency. Forecasting product demand and making decisions that benefit both the company and the customers are key responsibilities for supply chain managers. When inventory is controlled, companies can have the correct number of materials on shelves, allowing current orders to be filled on time, as well as incoming orders to be filled.

2. Sourcing

It is critical to find the correct material supply vendor because it provides a competitive advantage to businesses. Having a reliable source for a variety of goods can help the company enhance product quality and increase customer satisfaction.

3. Making

Once manufacturers have raw materials on hand, the process of production may begin. Supply chain management helps ensure the efficiency of production and the quality of finished products as well as the packaging process.

4. Delivering

Another aspect of supply chain management is supply chain logistics. Supply chain managers oversee the complete process of ensuring that a customer receives the final product through a delivery service. Coordinating orders, scheduling delivery, dispatching, invoicing, and receiving payments are all part of this procedure. Supply chain managers are also in charge of contracting out the delivery process to other shipping and handling companies.

5. Returning

Returns are inevitable in any sector that involves customer purchases. In this case, supply chain managers may be required to troubleshoot or network in order to facilitate product returns. Returns can occur for a variety of reasons, including defective products, damage, or failure to meet quality criteria.

The Importance of Supply Chain Management

Supply Chain Management is a very important aspect to any company. When supply chain management is done correctly and efficiently, businesses see an effect on their overall performance. To satisfy both producers and distributors, the right product in the right amount must be delivered on time. Plants, warehouses, and transportation vehicles can all benefit from better supply chain management. Because a product is delivered on time and consumers can acquire their items, cash flow is instantly improved. Consumers also expect a high level of customer service. If goods are not delivered on schedule, a company’s supply chain management departments must convince customers that they will receive their products as soon as feasible. As a result, SCM has a significant impact on a company’s bottom line.

Benefits of Supply Chain Management

1. Higher Efficiency

Companies that utilize supply chain management, have a higher efficiency rate and companies can plan better in all aspects of their business, such as resource procurement, logistics and delivery. When certain things are planned, they have a better idea of the demand in their business and in turn can collect real-time data of products and prevent delays in manufacturing and shipping.

2. Quality Control

Supply chain managers can not only control the quality of the final product but are able to control the quality of the suppliers a company uses. With quality control in place, this will reduce scrap rates, reworks and product returns. Quality control will also ensure the quality of the delivering products when good delivery is established, this makes it so that deliveries will be on time.

3. Reduced Cost

By knowing demand in a supply chain, certain demands can be met at the right amount of product in inventory can be controlled, reducing the amount of overproduced product on the shelves and helping in managing the supply chain disruptions. Understanding what works best in a supply chain, as well as employing the best pricing for vendors and logistics, may help any manufacturer minimize costs.

Supply chain management is very beneficial to any company. At NewStream Enterprises, LLC, our experienced SCM team can manage your inventory and lower costs. Improved planning, forecasting, customer service, and just-in-time delivery approach, are just a few things our SCM services have to offer. When supply chain management is executed properly, this will ensure that customers are getting their products on time. Supply chain management combined with our other services, kitting and packaging, warehousing and distribution, and assembly will greatly reduce the cost of your supply chain and make sure you LOVE it.

Interested in our SCM services? Contact us today for all of your supply chain needs and let us help you fall back in love with your supply chain!