Supply chain management is crucial in this globalized world.
With SCM, organizations strive to offer the greatest quality items to end customers and meet all of their requirements.
Most businesses depend greatly on a well-functioning supply chain network.
At multiple levels, supply chain members cooperate to increase productivity, create standardized procedures, eliminate unnecessary duplication, and reduce level of inventory.
Supply Chain Management
Supply Chain Management can be characterized as the regulation of the movement of goods and services from the manufacturing site to the consumption stage.
It also includes the transportation and processing of raw materials used in work-in-progress, inventories, and fully stocked items.
Figure 1- Supply Chain Management
It is the function of management which follows actions in order to optimize value to the customers and maintain a competitive edge over time.
Supply Chain Management is an intentional action on the part of manufacturers and suppliers to construct and operate distribution networks in the most effective manner feasible.
The 5 Functions of Supply Chain Management
The transport of building ingredients into an organization, some elements of the storage helps in processing of resources into completed items.
The distribution of finished goods out from the organization toward the ultimate consumer are all part of supply chain management.
Companies are reducing control of raw resources suppliers and logistics providers as they attempt to concentrate on key functions and become much more flexible.
These 5 functions are gradually being transferred to other companies that are more cost-effective at performing them.
Figure 2- Functions Of Supply Chain Management
The 5 functions of supply chain management are:
One of the important and first functions of supply chain management is purchasing.
This is to do with gathering raw material and resources necessary to produce the products.
There are some things that are needed to keep in mind about this function.
- It requires engagement with suppliers to ensure that resources are delivered on time.
- There are a number of things to consider in purchasing raw ingredients or other items necessary to make finished products.
- All purchasing operations will have a significant effect on a business’s profit growth.
- When obtaining raw ingredients, it’s important to make sure they’re of the highest level of quality for the organization.
SCM is responsible for ensuring that only appropriate resources are acquired.
- Excessive purchasing might result in heavy loss of money and area.
As a result, buy directors require up-to-date data on requests and the resources required for completing products timely.
The operating team is in charge of market demand forecasting.
As a result, inventory control, manufacturing, and transportation need a good start.
Before placing a raw material purchase requisition, the company must estimate the amount of market growth and the quantity of the product it will need to create.
If consumer preferences are forecasted too high, additional inventory costs will be incurred.
If consumer preferences are underestimated, the organization will be unable to meet it, resulting in revenue shortfall.
As a result, the supply chain department’s operation is crucial.
Here is a video link about supply chain management:
This is a supply chain management task that necessitates a great deal of collaboration.
After the production of goods has started, it will require warehouses until it is dispatched for shipment.
Logistics guarantees that things arrive at their destination without any difficulties.
If SCM involves transportation to overseas nations, it is important that all paperwork is done accurately.
The logistics department should be knowledgeable with the procedures that should be performed by businesses when shipping products to different regions.
Mechanical concerns might cause vehicles to be late.
Supply chain managers should be prepared to quickly organize for a different mode of transportation.
Utilization of Resources
The resource management function team manages raw resources, software, manpower, and time for all businesses.
It determines how to allocate funds to the right things at the correct time in order to maximize productivity while reducing prices.
Resource management is very difficult when in industries the same machinery is used to make different products.
To distribute workstations for every product, resource managers need to understand how so many requests in that product will be completed.
The managers should also analyze the cost of adding additional resources to enhance productivity while ensuring that it does not negatively impact profits.
Workflow for Information
All those other functions of supply chain management are regularly monitored through sharing of information and transmission.
If the information process and interaction are really not up to pace, the entire system might break down, resulting in incompetence.
Descriptions about contracts in hand and industry trends will be provided through downstream information.
These specific details are vital in ensuring that adequate supplies of raw resources are provided.
One of the most important functions of supply chain management is to arrange for raw materials.
The officer in charge had to have reliable information regarding the availability of numerous resources in order to accomplish this successfully.
If they have the information that there will be a scarcity, they may buy extra materials and keep production running properly.
Maintaining a proper balance is the goal of effective supply chain management.
Supply chain management should be effective in terms of waste management, enhance profits, lower expenses, and assure item timely deliveries.
This is why studying the five functions of supply chain management is essential for manufacturers, as it will give you clarity on how to increase your business’ effectiveness.