Supply Chain Management
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By: Krypt - May 1st, 2022

Supply Chain Management (SCM) is the practice of planning, creating, and controlling an organization’s supply chain through the use of systems and processes. SCM helps organizations to manage their resources more effectively and to ensure they are meeting consumer demands cost-effectively while using fewer resources than before. While the concept of supply chain management may seem complicated at first, it makes good business sense when implemented correctly and improved upon over time as your company grows and expands its product offerings.

The Importance of Supply Chain Management

In almost any industry, supply chain management is just as important as creating a product or service. This encompasses everything from logistics to forecasting to inventory and makes sure that your products get delivered on time and without fail. If a product shipment is delayed, if something goes wrong with an order, if there’s an error in filling an order—any of these things could hurt you by making customers angry and lowering their perception of your brand. Imagine how much worse it would be if they’re not even products you’ve sold yourself but products made by one of your suppliers! Making sure that your supply chain functions well is vital to increase revenue and building customer loyalty.

There are two main areas of management: logistics and procurement. Logistics involves all shipping, warehousing, delivery, handling, and other activities associated with moving products from your warehouse to customers. Procurement is about identifying suppliers and negotiating prices for everything from raw materials to packaging. Each area can be complex, so you should consider consulting a business consultant or an expert in your field before getting started. However, some fundamental best practices apply regardless of what type of industry you’re in or which specific products you sell. While each part of supply chain management has different options available to it, here are some key tips to follow across the board

Physical vs Digital Distribution

Physical Distribution – The method of physically moving goods from point A to point B. This requires some sort of truck, train, ship, or air service to carry goods from one location to another. Digital Distribution – The method of selling your products electronically over the internet without having physical contact with your customers. Many people believe that digital distribution is cheaper and easier than physical distribution, but in reality, it is not nearly as cost-effective as you might think. It can be difficult to predict your sales and profit margin unless you can control some or all aspects of production. This means that product inventory can become lost, damaged, or simply unused if you do not effectively plan for these events.

If you are considering creating your products it is often a better idea to choose a physical distribution. This will allow you to take charge of your product creation process, SAP SYSTEM taking responsibility for all of your stock and deliveries in addition to pricing and selling. If you outsource creation or manufacture then having control over these processes will also allow you to place stricter guidelines on how your product is produced which can lead to higher quality. Make sure that whichever route you decide upon benefits both you and your customers!

Overcome challenges in Supply Chain Management Regardless of what method of distribution you chose there are likely to be some challenges that crop up along the way.

Steps in the Value Stream Mapping Process

There are many supply chain improvement models, such as Business Process Reengineering (BPR), CMMi, and TQM, but all essentially point to similar principles and processes. The management deals with managing risks by controlling one’s variables or working with those who do to manage their risks positively. There are many different methods of securing supply chain management, but all tie back to two common factors: Order Quantity Planning and Product Design for manufacturability (DFM). DFM encompasses all aspects of design that can affect product cost, including the Interchangeability of parts (to reduce inventories).

Other aspects of DFM include the design for assembly (to reduce labor time), design for testability (to reduce test time and cost), and design for logistics (to allow components to be pre-assembled). In short, products that are designed with all of these considerations in mind will not only require less material and manufacturing labor, but they’ll also offer a more efficient supply chain. The concept is known as Integrated Product Development. More generally, supply chain management is a practice that requires constant effort to ensure optimum efficiency. Many organizations utilize Value Stream Mapping models to improve their processes over time. Value Stream Mapping provides a step-by-step framework for systematically improving each aspect of a product’s flow through its life cycle, from ordering to the final disposal.

Collaboration Between Business Units in a Value Stream

Value stream mapping involves visualizing your overall production process from raw materials to delivery of a final product as a flow of material, not as isolated workstations. It’s a helpful tool for streamlining your supply chain, ensuring that there are no unnecessary steps in getting materials from supplier to factory floor to finished goods. For example, it may reveal that two assembly lines share one machine and can be streamlined by installing another so that each line only has to pay for one.

Category: Supply Chain

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