What is SCM?
You’re probably familiar with some aspect of supply chain management (SCM), but perhaps not as well-versed in the detailed processes within SCM. So, what is SCM? Supply chain management integrates supply and demand management within and across companies. It includes important variables such as the planning and management of all activities involved in sourcing and procurement, conversion and all logistics management activities. It can also include coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers and customers.
Five Stages of SCM
Within the overarching umbrella of SCM, there are several stages which identify the exact process from start to finish. These stages include:
- Plan
The entire process of supply chain management must be planned out with the primary goal of the organization in mind. The plan should also address how the organization’s goods or service will fulfill the needs of their customers. - Develop
A major component of this process is to develop strong relationships with suppliers. The potential suppliers are then contracted and conditions of delivery, payment and transportation are then finalized with them. - Make
The product is finally manufactured, thoroughly tested and packaged and then launched into the market. - Deliver
This involves the transportation of the product through various channels into the hands of the ultimate customer. - Return
Customer queries and complaints are handled subsequently. If there are any defective items present, they are returned to sender.
Benefits of SCM
It’s clear that there are many benefits of supply chain management, but what exactly are those benefits? Effective SCM achieves more accurate information, along with the ability to carry out better sales forecasting. Other benefits include building stronger partnerships and supplier networks, balancing out supply and demand, improving business plans and working strategies, predicting transportation requirements, planning daily operations of the company, creating streamlined inventory management and removing irrelevant elements.
While all organizations have supply chain processes of varying degrees, it is important to understand, identify and implement each stage with careful consideration. Variables including the size of the organization and the type of product manufactured affect SCM components, so understanding the most critical business discipline in the world today will greatly benefit you, your business and your bottom line.
