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Supply Chain Management (SCM): How It Works

What is Supply Chain Management (SCM)?

Supply Chain Management (SCM) refers to the strategic coordination of these activities to optimise the flow of goods, information, and finances across the entire supply chain network. It involves collaboration among suppliers, manufacturers, distributors, retailers, and customers to achieve seamless operations.

How Supply Chain Management Works

Supply Chain Management is an ongoing endeavour undertaken by companies to optimise the efficiency and cost-effectiveness of their supply chains.

SCM aims to centralise control or establish connections between the production, transportation, and distribution of a product. By overseeing the supply chain, companies can reduce unnecessary expenses and streamline processes to expedite product delivery to consumers. This is achieved by closely monitoring internal inventories, production, distribution, sales, and the inventories of the company’s suppliers.

SCM operates on the premise that almost every product entering the market is the result of collaboration among various organisations forming a supply chain. Since supply chains have existed, most companies have only recently recognised their significance as a value addition to their business operations.

The Importance of Supply Chain Management

Supply Chain Management holds significance in accomplishing various business goals. These include overseeing that manufacturing processes can enhance product quality, therefore minimising the potential of recalls and legal issues while strengthening the brand in the eyes of consumers. Likewise, managing shipping procedures can enhance customer service by preventing expensive shortages or excessive inventory situations.

The bottom line is that effective SCM offers the opportunity for companies to increase their profitability, particularly for businesses operating on a large scale or internationally.

5 Phases of SCM

Supply Chain Management operates through a structured framework consisting of five essential components, each contributing to the seamless flow of goods and services.

Planning

This foundational element involves forecasting demand, strategising production schedules, and devising strategies to efficiently meet customer needs. The producer maps out the supply chain journey from start to finish, anticipating requirements, and aligning resources accordingly.

Sourcing

The focus is on identifying suitable suppliers, engaging in negotiation for contracts, and nurturing relationships to ensure the timely and cost-effective availability of materials. This component is pivotal in establishing reliable partnerships to sustain the flow of resources.

Manufacturing

The manufacturing stage oversees the transformation of raw materials into finished products. It’s about executing production processes efficiently, maintaining quality standards, and optimising operations to create market-ready goods.

Delivery

Managing logistics, transportation, and distribution is crucial to ensure products reach customers promptly and cost-effectively. This stage involves orchestrating the movement of goods from production facilities to the end-user, emphasising efficiency and timeliness.

Returns

Handling reverse logistics, managing product returns, and addressing customer concerns are integral in maintaining customer satisfaction. This component ensures that the supply chain loop remains closed by effectively managing returns and addressing any issues, fostering consumer trust and loyalty.

Supply Chain Models

Supply chain models are diverse and adaptable, catering to distinct business demands and operational scenarios.

Continuous Flow

The Continuous Flow model prioritises uninterrupted production, aiming to minimise interruptions in the supply chain. It focuses on maintaining a steady flow of goods and services, ensuring a consistent and seamless operation without halts or delays.

Agile

The Agile model is about flexibility and adaptability. It swiftly responds to market changes, enabling companies to adjust strategies, production, and distribution methods. This model thrives on responsiveness to changing customer needs and market dynamics.

Fast

Speed and prompt delivery characterise the Fast model. It concentrates on rapid response and quick delivery to meet urgent demands. The emphasis is on quick and efficient movement of goods, ensuring timely delivery to customers or clients.

Flexible

Adaptability reigns supreme here, allowing changes in production and distribution according to varying market conditions. The Flexible model is responsive to changing demands, enabling companies to adjust their operations without significant disruptions.

Efficient

The Efficient model focuses on cost-effectiveness, streamlining operations to minimise wastage, reduce costs, and optimise resource allocation throughout the supply chain.

Custom

Tailored to unique business requirements, the Custom model offers personalised solutions. It’s highly adaptable, allowing businesses to design their supply chain structure to precisely fit their specific needs, whether related to products, markets, or operational strategies.

Supply Chain Ethics

The relationship between ethics and SCM is intrinsic and pivotal. Supply chain ethics not only protects the integrity of the supply chain but also contributes positively to society and the environment, aligning business practices with ethical principles and societal well-being.

Supply chain ethics prioritise fair treatment of workers, sustainability, and responsible sourcing. They underline the importance of ensuring fair wages, safe working conditions, and equitable treatment of labourers at every stage of production. Additionally, these practices advocate for sustainability initiatives, reducing environmental footprints through responsible resource utilisation, waste reduction, and eco-friendly practices.

Supply chain ethics include accountable sourcing, where companies actively engage in sourcing materials and products from suppliers committed to ethical standards. These ethical standards in SCM reflect a company’s values and commitment to ethical conduct. They go beyond just compliance with regulations, showing a deeper dedication to social and environmental responsibilities.

Example of SCM

The eCommerce industry is experiencing significant growth and rapid evolution, resulting in heightened demand for efficient and swift logistics and delivery systems. Nowadays, most retailers adopt an omni-channel approach, selling through various channels such as online stores, apps, third-party platforms, and physical retail outlets.

Within the realm of eCommerce, managing the supply chain is closely intertwined with overseeing inventory.

Brother’s assortment of portable printers and thermal labelling devices plays a crucial role in ensuring seamless warehouse logistics. These tools aid businesses in digitally monitoring inventory, thus minimising the occurrence of human errors.

Moreover, Brother’s labelling solutions guarantee compatibility with major shipping companies, enhancing the likelihood of prompt deliveries and satisfied customers.

Brother offers a diverse range of products designed to streamline warehouse operations, including the robust RJ-3250WB device — a portable 3-inch label and receipt printer equipped with Bluetooth and wireless connectivity, enabling the printing of small labels from any location within the warehouse.

Additionally, solutions like the PJ-883 empower workers to print high-quality A4 documents while on the move, ultimately saving time, boosting efficiency, and reducing travel distances.

Various applications, such as the Brother iPrint&Scan tool, along with software development kits (SDKs), contribute to enhancing traceability within the supply chain. These software solutions facilitate remote access to information and seamless integration with other business platforms.

A supply chain starts with the procurement of raw materials or components from a supplier and culminates in delivering a product or service to consumers. Within supply chain management, each segment presents an opportunity to enhance value or diminish inefficiencies. An effectively managed SCM initiative has the potential to boost a company’s income, lower expenses, and fortify its overall financial performance.

DISCLAIMER: This article is for informational purposes only and the opinion of the author. BARTERCARD is not connected with any company mentioned.

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