Supply Chain Management (SCM) is the process to maximize customer value and to get an effective competitive advantage. SCM covers various factors like product development, sourcing, production, supply, etc. It helps to ensure smooth flow of goods by ensuring sufficient storage of raw materials, inventory work-in-progress and finished products. To understand this properly, students have to go through some more topics or phases like SCM designing, planning, execution, and monitoring.
All these will help to carry out an effective supply chain management system. The aim of SCM is to provide high product availability through the efficient and timely fulfillment of customer demand. Then how is it possible? Obviously, it requires an effective flow of products from the point of origin to the point of consumption. Supply Chain Management includes three basic concepts these are: - Business Process, Network Structure, and Management.
The supply chain consists various factors through which goods move one place to another, i.e., from producer to consumer. But there are also some middlemen like distributer centers, cross-docks, warehouse, etc. So the organization should find out the problem related to these factors. Then comes distribution strategy.
It involves various schemes of delivery, mode of transportation and more. To reduce the transportation cost, all these activities should be done with proper coordination. Another problem in the SCM is Inventory Management. Then comes the last problem, i.e., cash flow. It included payments, its terms, and exchange of funds, etc.
Supply Chain Management covers many departments of a business like administrative, finance, production, marketing, distribution and more. So there should be proper coordination between all the departments to get effective SCM. Every department has their responsibility, for example, purchasing department helps to get orders, marketing department examine customer’s demand and make effective marketing decisions. The department communicates with distributors to ensure sufficient availability of products. So there must be a proper coordination between them.
The total quality management (TQM) approach is used by organizations to improve their operations and the processes. It helps to improve product/service quality, productivity, and competitiveness by improving communications with customers. Material Requirements Planning (MRP) helps to maintain the lowest possible cost of the material, helps to keep required product level in the store and it ensures proper manufacturing process, delivery process, etc.
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