SCM at a Glance: Understanding the Supply Chain Management Process
With increasing AI dependency, automation is on par with advanced technology. And blockchain technology makes business transparency an expectation.
The supply chain industry is no exception. Being competitive in today’s market requires agility in every business aspect.
This article shows different components within the supply chain management process. It helps you understand how having a supply chain system can keep you a step ahead of your competitors.
Supply Chain Management
To appreciate supply chain management, you must understand the meaning of “supply chain.” It’s the various business entities and activities involved in providing goods and services. This can include manufacturers, warehouses, suppliers, and retailers.
Supply chain management refers to the oversight of relationships between those entities. It relies on procurement and operational management. Also important is the organization of logistics within the supply chain.
Supply Chain Management Process
Logistics and supply chain management have subtle differences. But they work together to strengthen the supply chain. A successful process maximizes efficiency, reduces costs, and enhances customer service.
Managers must consider 5 components of supply change management when developing a process:
1. Strategic Planning
Strategic planning is the design phase. This is where you assess long-term goals and create models for achieving them. You must assess your plan, often optimize resources, and meet business requirements.
You can analyze product demand and inventory management using supply chain management software. This becomes even more helpful when it’s time to execute your strategic plan.
2. Strategic Sourcing
This is where you identify suppliers with whom you’ll develop strategic relationships. Some suppliers have a digital marketing strategy that highlights their values and successes. Absent that information, comprehensive supplier research reveals viable options.
Once you’ve identified suppliers, negotiate terms for drafting procurement contracts. This establishes service level agreements used for supplier performance reviews.
Supplier relationship management (SRM) provides key analytics in global supply chain management. SRM software and business processes track spending with each supplier.
Supplier performance or tactical sourcing needs may dictate revisions to your supplier list.
3. Plan Execution
Plan execution occurs daily, from order requests to fulfillment. And having the right supply chain management system allows you to observe performance. Important execution measurements provide details on manufacturing, sourcing, and logistical activities.
Optimizing your supply chain includes guaranteeing the delivery of products and services. Outsourcing fulfillment to a logistics vendor could be your best option. And utilizing a shipping app makes it easier for you to track shipments along the way.
A professional shipping company could also improve inventory and order accuracy. Contracting a reliable shipper may lower shipping costs and secure invoice payment.
No business wants to plan for returns, but things happen. Having third-party shippers who improve order accuracy could reduce the volume of returns. But sometimes product defects make returns inevitable.
You must prepare for returns by creating an unbroken reverse logistics process. This enables prompt pickup, shipping, and supplier receipt. And the speedy shipment of replacement products becomes possible too.
Understanding the Supply Chain Management Process
Understanding the supply chain management process helps to improve your business. In this digital age, supply chain software provides real-time metrics. It assists in optimizing process flows, from product manufacturing to shipment and returns.
Deciding on a supply chain software application can prove daunting. Contact us for help identifying a solution for supply chain management and logistics.