Ravinder Tulsiani is a published author who has written about personal finance, real estate, self-help and online marketing.
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Sunday, November 6, 2016
Supply Chain Management Basics
Simply put, Supply Chain Management (SCM) is about the 3 components:
Supply: Supplies are those inputs that a company relies upon to produce the product that will ultimately reach its customers.
Chain: The chain is the group of suppliers that bring those inputs to a company and the process whereby those inputs are integrated into the company.
Management: Management is the coordination and organization of all these inputs and their implementation.
So, simply put Supply Chain Management is the science and art of improving the processes that bring suppliers of raw materials together and move those materials through the company until they reach the endpoint - the customer.
What SCM Involves
Supply Chain Management (SCM) covers every aspect of the business from input to output and as such requires an extensive array of tools and strategies to help managers to coordinate and organize a company. SCM involves managers who map out the entire process and look for inefficiencies and others who develop and maintain relationships with suppliers to ensure a steady supply of inputs. It involves the actual process of manufacturing or value add in which those inputs become the products that will be sold as well as the process of getting those value added products to customers. And finally it involves dealing with and compensating for supply chain returns, such as defective products.
The Dilemma of SCM Software
While I discussed five sections that make up Supply Chain Management, each of these sections is unique to a particular business. As such, no single product has been developed to handle the software needs of a company from start to finish. As a result, when industry experts talk about Supply Chain Software, they are really talking about a combination of many different programs that, when applied together, help manage the supply chain.
While literally thousands of different products are on the market today, they all fall into one of two broad categories, Supply Chain Planning (SCP) or Supply Chain Execution (SCE) software.
Supply Chain Planning software covers those programs which use advanced mathematical algorithms to map out the flow of products through a company and to identify any inefficiencies. The ultimate goal of this type of software is to help reduce faulty products, to speed up the time to market, and to reduce inventory.
Supply Chain Execution software is designed to automate different components of the supply chain. For example, Supply Chain Execution Software might update inventory listings in a central directory as soon as inputs are brought in from a supplier or are sold off to the customer. In this way, SCE software eliminates the costly and time consuming task of tabulating the total current supply so as to know when to place the next order.
The Goals of Supply Chain Management
Ultimately the goal of Supply Chain Management is to bring greater efficiency to a company by reducing errors, maintaining steady inputs, and reducing excess inventories. With the growth of the internet, however, it is transitioning into a means of collaboration between companies. By concentrating their efforts on better communication with suppliers and customers, inefficiencies are ironed out not only within the company but in those surrounding it as well. The internet has made the communication between firms necessary for this to take place possible. Consequently, the hope for Supply Chain Management in the future is not only to create a more efficient and profitable business, but to contribute to a more efficient and profitable global marketplace as well.
Ravinder Tulsiani is a Lean Six Sigma practitioner and the Author of the #1 BESTSELLER: “Your Leadership Edge”, an innovative step-by-step leadership training program that will help you develop a highly engaged and super-charged workforce... get your copy at http://www.yourleadershipedge.ca.