What Is Supply Chain Management and Why Is It Important?





Supply chain management has a significant effect on the business, because a stronger SCM can immediately enhance the customer experience.

Choosing the best logistics partners and implementing cutting-edge supply chain technologies can have a significant impact.

Although supply chain management is not a straightforward task, it does provide several benefits that will help the profit margins.

Definition of Supply Chain Management 

The management of a product’s development and distribution from raw resources acquisition to manufacturing, storage, and transportation to the final client is known as supply chain management (SCM).

Supply chain

Figure 1- Supply Chain Management 

Supply chain management works in 5 categories to fulfill the mission of the industry.

The categories are:

  1. Planning to meet customer requirements.
  2. Sourcing of raw materials and other necessary equipment. 
  3. Manufacturing of the products ordered by customers. 
  4. Delivering the goods after manufacturing.
  5. Providing support on return policy.

The Importance of Supply Chain Management

The success of SCM has a strong impact on the entire success of the business.

Organizations with extended global supply networks are believed to have approximately 80% and 90% of all expenses wrapped up in the supply chains, according to cost saving estimates. 

SCM is also necessary due to the growing complexity of modern supply chain operations arising from global sourcing, integrated marketing delivery, and vast industries.

So the key benefits supply chain management are:

Improving Service To Customers

Customer support can be directly improved with efficient supply chain management.

Customers can expect to receive the appropriate number and quality of products.

A dependable supply chain can assist prevent blockages and guarantee that clients receive their products in a timely manner.

Customer satisfaction will rise as a result of establishing a link between distributors and dealers.

Furthermore, supply chain management frequently improves the understanding, allowing users and customer support representatives to know the condition of each shipment at all times.

Here is video link about the importance of SCM:


Quality Assurance  

Enhanced quality assurance available with a wide influence over not only their local suppliers but also their suppliers’ subcontractors. 

Using minimum essential quality requirements, for example, allows direct providers to find and engage with additional providers who match those requirements.

Decrease Operating Costs

Supply chain managers are frequently concerned with decreasing expenses at all stages of the supply chain.

Such as:

Reduces The Cost Of Purchasing

Retailers rely on supply chains to provide costly goods quickly so they don’t have to keep them in stock for longer than required.

Reduces The Cost Of Production 

To minimize material waste that might cause manufacturing to stop, businesses depend on supply networks to consistently transport supplies to manufacturing sites.

In another word, it can be said that a dependable supply chain ensures that supplies are delivered to assembly facilities on time. 

It is avoiding any expenses that may arise as a result of interruptions.

Reduces The Total Cost Of The Supply Chain

Brands and distributors rely on supply chain managers to create connections that satisfy levels of customer service while minimizing overall cost.

Supply chains that are fast allow a company to be far more competitive in the global market.

Supply chain management

Figure 2- Importance of Supply Chain Management 

Risk Management Has Increased 

Supply chain information can highlight possible risks, allowing organizations to put alternative frameworks in order to respond immediately to unforeseen changes.

Avoid potential bad consequences by taking concrete actions instead of responding to supply chain interruptions, quality assurance problems, or other issues as they develop.

Enhance An Organization’s Economic Condition 

Supply chain managers are valued by businesses as they help maintain and decrease supply chain costs. 

This can lead to a significant boost in company profitability.

Supply chain managers are appreciated by corporations because they improve flow of products to consumers. 

If a company can create and implement a product to consumers in 10 days instead of 40, it can bill the consumer 30 days earlier.

Agility of Organizations

Supply chain management is essential for businesses to stay flexible and respond to any unanticipated issues or variations that could arise. 

Companies will be able to deal with different situations and discover effective responses faster efficiently by optimizing supply chain procedures and enhancing transparency.

Furthermore, establishing emergency plans and unexpected situation evaluations of product cycles will enable you to swiftly analyze your choices and determine the most suitable answer for your business.

Final Words

Everything from product flow to environmental hazards is streamlined with supply chain management. 

Companies can appropriately recognize problems and delays with an effective SCM. 

SCM is crucial for transferring products quickly and effectively to their ultimate stop.

With the growth of competitiveness in the current economy, an effective supply chain can provide a company with the competitive advantage it requires.

About the author, Declan Yin

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