What are supply chains and their importance in different businesses and industries?
Introduction
The concept of supply chains is an old concept that has evolved over the years with the variation and evolution of the surrounding environment and technology. Supply chain management has become indispensable due to continuous innovation in technology and rapidly changing customer expectations and the success and competitiveness of organizations has become dependent on effective supply chain management that is compatible with the ever-changing environment and technology.
What are supply chains?
Supply chains are a connected network of individuals, organizations, resources, activities and technologies involved in the manufacture and sale of a product or service and supply chains begin with the delivery of raw materials from the supplier to the manufacturer and end with the delivery of the final product or service to the final consumer, that is, they are the steps taken by organizations to deliver the product or service from its original state to the end customer.
Organizations periodically develop supply chains so that they can reduce their costs and remain competitive in business.
What is Supply Chain Management?
Supply chain management, defined by APICS, is "designing, planning, executing, and monitoring supply chain activities to achieve net worth, build a competitive infrastructure, leverage global logistics, synchronize supply with demand, and measure performance globally."
SUPPLY CHAIN MANAGEMENT CAN ALSO BE DEFINED AS DEFINED BY A SUPPLY CHAIN MANAGEMENT ORGANIZATION (CSCMP) AS "PLANNING AND MANAGING ALL ACTIVITIES INVOLVED IN SOURCING, PROCUREMENT, TRANSFER, AND ALL LOGISTICS MANAGEMENT ACTIVITIES. AT ITS CORE, SUPPLY CHAIN MANAGEMENT INTEGRATES SUPPLY AND DEMAND MANAGEMENT WITHIN AND ACROSS COMPANIES."
What are the tasks of supply chains?
The tasks of supply chain management include planning and implementation of the movement of raw materials, capital and information as well, as well as identifying the sources of raw materials, managing inventory and storage, and supply chains, or as they are called supply chains, divide products and return surplus or defective.
OPTIMIZING THE MANUFACTURING PROCESS IS ONE OF THE MOST IMPORTANT TASKS OF SUPPLY CHAIN MANAGEMENT (SCM), FROM RAW MATERIALS TO PRODUCTION AND LOGISTICS TO THE LAST STAGE OF DELIVERY TO THE CUSTOMER.
Benefits of Supply Chain Management
- Supply chain management provides organizations with many benefits that translate into higher profits, better brand image, and greater competitive advantage. These include the following:
- Risk management and forecasting of market requirements.
- Increase sustainability, from a societal and environmental point of view.
- Improvements in cash flow.
- Provide more efficient logistics services.
Elements of supply chain management
The supply chain management process consists of 5 main elements, which are as follows:
1. Plan or strategy
ORGANIZATIONS NEED A STRATEGY TO MANAGE ALL THE RESOURCES THROUGH WHICH CUSTOMER DEMAND FOR THEIR PRODUCTS OR SERVICES IS MET. A BIG PART OF SCM PLANNING IS DEVELOPING A SET OF METRICS TO MONITOR THE SUPPLY CHAIN SO THAT THEY ARE EFFECTIVE AT LOWER COSTS AND PROVIDE HIGH QUALITY AND VALUE TO CUSTOMERS.
2. Source (Supplier)
ORGANIZATIONS SELECT SUPPLIERS TO PROVIDE THE GOODS AND SERVICES THEY NEED TO CREATE PRODUCTS THEREFORE, SUPPLY CHAIN MANAGERS MUST DEVELOP A SET OF PRICING, DELIVERY, AND PAYMENT PROCESSES WITH SUPPLIERS AND CREATE METRICS TO MONITOR AND IMPROVE RELATIONSHIPS THEN, SCM MANAGERS WORK TO GROUP PROCESSES TO MANAGE THE INVENTORY OF THEIR GOODS AND SERVICES, INCLUDING RECEIVING AND VERIFYING SHIPMENTS, AND TRANSFERRING THEM TO MANUFACTURING AND PRODUCTION FACILITIES.
3. Manufacturing
Supply chain managers schedule activities for production, testing, packaging, and preparation for delivery and this is the most metrically intensive part of the supply chain, the part where companies can measure quality levels in production and worker productivity.
4. Delivery
THIS IS THE PART THAT MANY SCM INSIDERS REFER TO AS LOGISTICS, WHERE COMPANIES COORDINATE THE RECEIPT OF ORDERS FROM CUSTOMERS, DEVELOP A NETWORK OF WAREHOUSES, SELECT CARRIERS TO DELIVER PRODUCTS TO CUSTOMERS AND CREATE AN INVOICE SYSTEM TO RECEIVE PAYMENTS.
5. Reference (returns)
This can be a problematic part of the supply chain for many organizations as supply chain planners have to create a responsive and flexible network to receive defective and excess products from their customers and support customers who have problems with the products received.
What is the importance of supply chain management?
It is known that supply chain management is an integral part of most business and is essential to the success of the organization and customer satisfaction. Its importance lies in the fact that:
- Enhances customer service in the organization.
- Reduces operating costs.
- Improved financial situation of the organization.
- Ensures efficiency and improves quality.
Conclusion
We can conclude that supply chains are complex networks that connect companies, suppliers and customers in the process of delivering goods and services from the supplier to the final consumer, and supply chains are the vital link that contributes to the success of various businesses and industries.
Efficient and sustainable supply chains offer many benefits and advantages, contributing to the low cost and high quality of goods and services, enhancing the speed of delivery and responding to customer needs.
