From supplying raw materials to a manufacturer to distributing it to the end user, everything that is touched in this process, forms a network which is known as “Supply Chain”. And managing this Supply Chain is referred to as “Supply Chain Management” or “SCM”.
Until recently, SCM was not considered as an important factor in the Supply Chain but the fierce competition in the market both domestically and globally has made companies realize it’s importance to manage the Supply Chain as effectively and efficiently as possible by using all scientific methods available in today’s world, by brainstorming the entire process and implementing the ideas that could help the organization in its day to day Efficient Supply Chain Management and provide better competitive edge over its rivals.
An example of Supply Chain :-
A food and beverages firm procures raw materials from a raw material supplier, puts in labor, machinery, does the packagings and stores it. Later, sells the finished products amongst distributors, distributors sell it to retailers and through retailers it finally reaches in the hands of consumers(end-user).
Here, starting from the procurement of raw materials to supplying it in the hands of end users, this entire process is known as “Supply Chain”, and managing it is called”Supply Chain Management”.
Key Benefits of Effective SCM
- SCM Controls Excess Cost –
By analyzing the amount of commodity consumed by the end users in a particular period of time, management can ascertain as to how much raw materials it needs to buy and avoid the possibility of over procurement and also under procurement, helps in hiring labor force, buying machinery equipments, in finalizing the size of the store Houston storing the finished product. thereby keeping the ratio in check and ensuring that the company’s resources are not wasted.
- Effective Distribution of Finished Products Through SCM :- When after all the hard work put into the production ends, time comes to ensure that it is distributed effectively amongst the end users and this is done by making sure that all the parties involved in this hectic procedure doing their part. For example, addressing the dealers’ concerns, whether goods reached in time, in the agreed upon quantity, without any physical damage, and any other as the case may be. This strengthens the tie between involved parties and also boosts confidence of all stakeholders in the business.
There are many other important aspects of Supply Chain Management that an organization eying to survive in the evermore competitive era of the 21st century and thereby growing bigger with every passing day needs to heed.