What is supply chain management (SCM)?
The process of transporting a product from raw material to the consumer is known as supply chain management. Supply planning, product planning, demand planning, sales, and operations planning, and supply management are all part of this process.
Why supply chain management is important
The impact of the supply chain, whether favorable or negative, is felt across the company. The impact is divided into two categories: customer satisfaction and return on investment.
Higher performance = happier customers = happier business
A successful return procedure necessitates a well-connected supply chain that includes communication at all levels. It is because of efficiencies that the supply chain meets or exceeds the customer’s expectations. Higher-order rates, greater customer sentiment, and lower cost-to-serve for the firm all benefit the overall company.
Increased performance = increased cost efficiency = increased pressure?
Higher performance is defined as the ability of all processes and people in the supply chain to transfer products and services to market efficiently.
When they’re required to move the same or more volume of product at the same or higher quality level, increased supply chain efficiency might put a strain on the team and their skills, as expenses and budgets are held flat or decreased.
Profitability is assessed by indicators such as working capital turnover or cash conversion performance; when a company’s health improves, successful cash management and revenue conversion follow. Flattening the cost curve is difficult unless two aspects are taken into account: new capabilities (process and data) that enable faster, higher-quality decisions; and the use of a tool that scales well for the value it provides to the organization.
Supply Chain Management Process: Five key steps for building excellence
Almost every organization’s supply chain management procedure is critical to the smooth operation of core functions. Processes could stall on the floor if a successful supply chain isn’t in place, lowering the overall results. Supply chains have been on their journey for decades, evolving from simple to recently developed algorithm-based ones. The supply chain management process has become a dedicated function as supply chain concepts evolve. Supply chain managers are in charge of ensuring that the supply chain, whether external or internal, is both efficient and cost-effective. But there’s also the question of how they do it.
The five main stages of the supply chain management process that must be followed are outlined here.
The strategic aspect of the supply chain management process is determining the best potential blueprint for achieving the ultimate goal. Plant location and size, warehouse architecture, delivery methods, IT solution selection, and other critical components should be identified by SCM managers. Not only that, but if important matrices like transportation cost modeling and warehouse efficiency models aren’t produced, the supply chain management process will be incomplete.
At this level of supply chain management, the focus is on identifying the most dependable raw material sources so that the manufacturing process is never jeopardized. However, when difficult conditions develop during operations, supply chain managers must ensure that important supply chain pain points are always tracked to keep the engine running. Holisol believes that establishing a contractual framework and selecting a capable supplier is one thing, but that there should also be a real mechanism in place for suppliers’ constant development, which would increase their efficiency.
This is the stage in which well-designed processes are put in place to give existing plans a tangible shape in the form of manufactured items that are ready for testing, packaging, and distribution. Not only that but the outcomes are quantified at this step to ensure optimal efficiency. Holisol’s IT experts create cost-effective IT solutions that assist companies in achieving excellence and increasing efficiency during the supply chain management execution stage.
When the supply chain reaches this stage, the managers are tasked with delivering the product/service in the right quantity, at the right location, and at the right time using appropriate carriers. To keep track of warehousing networks, inventory models, invoicing, and payment receipts, supply chain managers should be fully equipped with modern IT tools.
The final step in the supply chain management process is the handling of returns. It entails not only inspecting returned products for quality but also keeping track of their inventory. Supply chain managers should put their resources on the ground, supporting them with technology for speedier pickups, replacements, and so on. Returns management should be viewed as a value improvement measure by supply chain managers, who must guarantee that all appropriate measures are implemented to achieve optimum efficiency.
Pre-requisite skills for supply chain management
They must combine technical and business expertise with teamwork and communication abilities to lead the way into a disruptive future.
Because supply chain projects frequently straddle business units, the ability to persuade department executives who work with the supply chain is critical, as are the skills to connect intelligently with leaders across the organization. Strong business acumen is also a must-have—you’ll be more effective working with your finance, sales, and marketing counterparts if you can communicate in their language. The effective supply chain leader of the future is tech-savvy and at ease with the world of “machines.”
Some have said that artificial intelligence will not replace managers, but that managers who cooperate with AI will replace managers who do not. This exemplifies the supply chain transformation: humans are important, but so is technology. It’s no longer a contradiction; it’s the new normal. This leader is not just technologically adept, but also socially adept. And this leader is a storyteller, delving into the supply chain’s myriad layers to uncover problems and weave the correct tale to help solve them.
A supply chain leader’s multifaceted position is evolving right now. To succeed in this new world, supply chain professionals must improve their teamwork, communication, and leadership abilities, and combine these with in-depth technical knowledge to become a dominant force in supply chain management software.
So, these are some basic steps for efficient and effective supply chain management. A seamless, consistent supply chain management makes sure that the economy continues to flourish and operate without any disruptions. Hope you find value in this content!