Supply chain management in an enterprise setup refers to efficiently organised and optimised flow of products or services. It requires real-time supervision of a business’ inwards and outwards flow of output to maximise its production. Supply chains usually cover both the manufacturing along with the information system of a company.
Supply chain management or SCM have several functions essential for the smooth operation of a business. Business owners must be well aware of what is supply chain management and its function to increase production, manage resource, maintain stock, and improve the revenue.
Functions of Supply Chain Management –
SCM maintains the balance between the customer's demand and a company’s manufacturing capability and supply. The primary role of SCM is to ensure timely acquirement of resources and delivery to the end customer. A company’s supply chain primarily comprises these functions –
• Acquiring Raw Materials – Timely acquisition of raw materials is one of the primary functions of SCM. It ensures that the production line continues to operate via timely delivery of resources necessary to manufacture a product. Supply chain management synchronises the plant with the supplier to maintain inflow of goods without any delay.
• Ensuring timely Operation – Supply chain management also helps with accurate demand planning and forecasting. A business has to predict the possible demand for its manufactured goods before placing a new order of raw materials. Incorrect predictions can lead to overstocking or manufacturing halt. SCM can show a likely rise or drop in demand if it follows the correct operation functions.
• Streamlining Logistics – Logistics management is an essential part of what is supply chain management. A business requires space to store raw materials and finished products. What every businessman should know about SCM is how to utilise the available warehouse space to optimise inflow and outflow of goods with minimum delay.
It can also integrate the functions of delivering goods to retailers and end customers. SCM minimises the time taken to move shipments to and from a warehouse which results in faster delivery of products.
Improving the logistical structure also helps with the distribution of goods. Aligning distribution flow allows a business to overcome issues like delay in shipments, coordinating resources to keep the production line intact, and even integrate a standalone supply chain from manufacture to delivery.
• Efficient Resource Management – Proper resource management is a key importance of supply chain management. It meets the production requirement by utilising resources, workforce, logistics and technology. A dedicated resource management team can ensure that all the assets are properly allocated for efficient and optimal operations.
• Better Information Management – Information distribution is necessary for effective SCM. It helps track various details like demand, production and delivery of goods, provide accurate information on workflow, etc. Data management is essential to prevent mismanagement and keep the manufacturing flow intact.
• Minimising Operational Costs – Reducing the operating cost of a business is an essential aspect of supply chain management. Better resource management reduces the cost of running a manufacturing plant. Also, accurate demand prediction ensures an establishment pays the minimum for warehousing or wastage of raw materials and finished products.
Improvements in the Supply Chain Management System
There have been various improvements in supply chain management over the last decade. New technology like automation, deep learning, AI has allowed more efficient handling of goods and similar logistics. Integrating the faster processing power with better tracking equipment like a bar code, QR code, etc. allows for more accurate inventory maintenance.
However, integrating such cutting-edge equipment in an existing architecture can become financially challenging. The business has to allocate a separate lump sum of funds for the systems as well as finance the implementation and staff training.
A business is guaranteed to enjoy strong profit margin if it is aware of the essential functions of supply chain management. Proper implementation and streamlining of the above mentioned factors are the keys to establish a promising business.
Functions of Supply Chain Management –
SCM maintains the balance between the customer's demand and a company’s manufacturing capability and supply. The primary role of SCM is to ensure timely acquirement of resources and delivery to the end customer. A company’s supply chain primarily comprises these functions –
• Acquiring Raw Materials – Timely acquisition of raw materials is one of the primary functions of SCM. It ensures that the production line continues to operate via timely delivery of resources necessary to manufacture a product. Supply chain management synchronises the plant with the supplier to maintain inflow of goods without any delay.
• Ensuring timely Operation – Supply chain management also helps with accurate demand planning and forecasting. A business has to predict the possible demand for its manufactured goods before placing a new order of raw materials. Incorrect predictions can lead to overstocking or manufacturing halt. SCM can show a likely rise or drop in demand if it follows the correct operation functions.
• Streamlining Logistics – Logistics management is an essential part of what is supply chain management. A business requires space to store raw materials and finished products. What every businessman should know about SCM is how to utilise the available warehouse space to optimise inflow and outflow of goods with minimum delay.
It can also integrate the functions of delivering goods to retailers and end customers. SCM minimises the time taken to move shipments to and from a warehouse which results in faster delivery of products.
Improving the logistical structure also helps with the distribution of goods. Aligning distribution flow allows a business to overcome issues like delay in shipments, coordinating resources to keep the production line intact, and even integrate a standalone supply chain from manufacture to delivery.
• Efficient Resource Management – Proper resource management is a key importance of supply chain management. It meets the production requirement by utilising resources, workforce, logistics and technology. A dedicated resource management team can ensure that all the assets are properly allocated for efficient and optimal operations.
• Better Information Management – Information distribution is necessary for effective SCM. It helps track various details like demand, production and delivery of goods, provide accurate information on workflow, etc. Data management is essential to prevent mismanagement and keep the manufacturing flow intact.
• Minimising Operational Costs – Reducing the operating cost of a business is an essential aspect of supply chain management. Better resource management reduces the cost of running a manufacturing plant. Also, accurate demand prediction ensures an establishment pays the minimum for warehousing or wastage of raw materials and finished products.
Improvements in the Supply Chain Management System
There have been various improvements in supply chain management over the last decade. New technology like automation, deep learning, AI has allowed more efficient handling of goods and similar logistics. Integrating the faster processing power with better tracking equipment like a bar code, QR code, etc. allows for more accurate inventory maintenance.
However, integrating such cutting-edge equipment in an existing architecture can become financially challenging. The business has to allocate a separate lump sum of funds for the systems as well as finance the implementation and staff training.
A business is guaranteed to enjoy strong profit margin if it is aware of the essential functions of supply chain management. Proper implementation and streamlining of the above mentioned factors are the keys to establish a promising business.
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