Supply Chain Management (SCM)
Definition and Meaning of SCM
Supply chain management is the systemic, strategic coordination of the traditional business functions and tactics across these business functions - both within a particular company and across businesses within the supply chain- all coordinated to improve the long-term performance of the individual companies and the supply chain as a whole.
In a traditional manufacturing environment, supply chain management meant managing movement and storage of raw materials, work-in-progress inventory, and finished goods from point of origin to point of consumption.
It involves managing the network of interconnected smaller business units, networks of channels that take part in producing a merchandise of a service package required by the end users or customers.
With businesses crossing the barriers of local markets and reaching out to a global scenario, SCM is now defined as:
Design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally.
SCM consists of:
integrated business operations
Objective of SCM
To decrease inventory cost by more accurately predicting demand and scheduling production to match it.
To reduce overall production cost by streamlining production and by improving information flow.
To improve customer satisfaction.
Feature of SCM
Scope of SCM
Customer Relationship Management
Customer Service Management
Customer Order Fulfillment
Manufacturing Flow Management
Product Development and Commercialization
Advantages of SCM
SCM have multi-dimensional advantages:
To the suppliers:
Help in giving clear-cut instruction
Online data transfer reduce paper work
Low cost of handling inventory
Low cost of stock outage by deciding optimum size of replenishment orders
Achieve excellent logistical performance such as just in time
Satisfied distributor and whole seller ensure that the right products reach the right place at right time
Clear business processes subject to fewer errors
Easy accounting of stock and cost of stock
Reduce total number of transactions required to provide product assortment
Organization is logically capable of performing customization requirements
It involves delivery speed and consistency.
Conformance of product and services to their requirements
Quality and reliability
After sales services
To employees and internal customers:
Teamwork and cooperation
Efficient structure and system