Basics of Supply Chain Management
Supply chain management (SCM) is the process of planning, organizing, implementing, and controlling the operations of the supply chain for the purpose of satisfying the customers’ needs as efficiently as possible. SCM is responsible for all the storage and movements of raw materials, work-in-process inventory, and finished goods inventory from point of origin to point of consumption.
A supply chain network of an organization includes the location as well as movement decisions in respect of procurement of raw materials and other inputs, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. With effective and efficient Supply Chain Management (SCM) company can improve the way it finds the raw components it needs to make a product or service and deliver it to customers. SCM is significant for both service and manufacturing organizations, although the complexity of the chain may vary greatly from industry to industry.
Supply chain management includes five basic activities: planning and strategy formulation, sourcing, transformation process, delivery, and at last handling customer complaints and excess stocks.
Planning and strategy formulation:
Company needs a strategy for managing all the resources that go toward meeting customer demands. Supply chain planning is carried out at corporate level as well as at operation level. Strategy formulated at corporate level is for long term horizon and includes decision on main objectives of supply chain in terms of customer service, formulating policies, designing supply chain, strategic alliances, etc. Operational level planning is for short term, and focuses on activities over a day-to-day basis. The effort is to effectively and efficiently manage the product flow in order to fulfill the strategic goals.