Why is supply chain management important?
Define supply chain management:
The journey of a product from the place of its origin, manufacture and to the consumer can be traced through supply chain management. It handles and manages the flow of goods and services actively streamlining business activities to maximize customer value and gain a competitive advantage in the marketplace.
Understand the stages in the basic supply chain flow:
- Planning: The first stage in supply chain management involves the analysis of customers and their patterns of consuming a particular product or service. The organization has to decide about the product, whether they should manufacture a product domestically or buy it from a supplier or vendor. In this stage, you have to map out the network of manufacturing facilities and warehouses, determine the levels of production and specifying transportation flows between sites. Gather data before planning begins.
- Sourcing: this involves the aspect of procuring the raw material and components. Contracts and schedules are finalized in this stage.
- Manufacturing: if the organization has planned to manufacture the product, then they would test, pack, store, check with facilities and regulatory compliance.
- Delivery: Distribution strategies and transportation options with all the other processes related to the payment, invoices, import, export, managing inventory and warehousing, all come under this stage.
- Return: Now, if the product is defective or the customer is just not happy with it, then the organization has to identify the product condition, authorize returns, schedule product shipment, replace the defective product and provide a refund.
Supply chain management encompasses a wide range of functions but here in this blog, we have tried to break it down to several strategic areas only.
Importance of supply chain management:
- It boosts customer services, customer satisfaction diminishes if the services or products are not delivered on time or if the necessary repairs or returns are not made on time.
- Reduces operating costs by decreasing the purchasing, warehousing, and the overall production cost.
- It streamlines everything from product flow to any unexpected natural disasters smoothly.
- It maximizes output on bottleneck resources to increase revenue.*
- Improves an organization’s financial position by increasing profit leverage and decrease the use of large fixed assets such as plants, warehouses, and transportation vehicles in the supply chain which ultimately increases the cash flow.
- It creates optimized schedules by balancing production efficiency and delivering performance.
- Synchronizes supply with demand to reduce inventories.
- It provides company-wide visibility to capacity.
- Enable scenario data-driven decision-making option to an organization.
- Improves the quality of life by supporting medical missions, conducting disaster relief operations, and other types of emergencies in a sustainable and eco-friendly way.
Supply chain management course outlines the evolution of the supply chain, basic supply chain structure, supply chain drivers, aligning supply chain with business strategy, managing supply chain risks, tracking and evaluating supply chain data, troubleshooting supply chain problems, sharing supply chain activities, sustainable strategies, lean techniques and the future of supply chain management.
Specializing in supply chain management can help you secure a job in any sector as most industries involve various elements of project management. If you want to pursue a career in supply chain management and want to learn more on the subject, you must consider enrolling in the specialized program in supply chain management.