What is Supply Chain Management, and Why Do I Need it?

If you’re a business owner or entrepreneur who is curious about supply chain management, you’ve come to the right place. You might be wondering why it’s important to manage your supply chain and how it could benefit your company. Here are some answers to commonly asked questions about what exactly this concept means and why you should pay attention to it.

1. What is supply chain management?

Supply chain management is the process of managing the flow of goods from the point of production to the point of consumption. It involves the coordination of all the people, activities, information, and systems involved in the flow of goods from the manufacturer to the customer. Supply chain examples typically include manufacturers, importers, distributors, retailers, manufacturers, customers, and more.

A supply chain inventory indicates the items that are in a customer’s possession or immediate area. It’s essential to connected supply chains, so it’s a prerequisite to any process you want to implement. Data about inventory is critical to tracking where products are, who owns them, when they were imported/produced, and whether they need to be replenished, whenever a change in ownership occurs.

With all the moving parts of the supply chain, it’s difficult to keep track of all of them. For this reason, asset management software, often referred to as “Capsule,” compiles that information and helps companies pull it all together.

3. Logistics operations encompass the various functions involved in transporting a product from the manufacturer to its destination in an organized manner. In a good logistics system, it’s important to develop clear, measurable, and cost-efficient methods of transporting goods throughout the supply chain. Things like road and rail logistics and freight brokerage are critical logistics functions and are often overlooked. They are critical to boosting efficiency and cutting costs as they cut out the mundane repetition of moving goods from point A to point B.

Agriculture rests on four legs: land, labor, products, and consumers. Land is the availability of space to grow crops. Labor is the ability or inability of a worker to execute the assigned task. Products are produced from inputs (materials) and end products (goods). Consumers purchase the end products, often referred to as the final product.

Once goods have been produced, the final output is extracted and transported.

2. How can supply chain management benefit my business?

Supply chain management is a very broad term that refers to the process of planning, procuring, and transporting materials and/or finished goods from the point of origin to the point of consumption. It is an integral part of business and is simply the logistical process of getting things from point A to point B. It is proposed as follow:

Every business works inside of a supply chain. In Dr. Deming’s Model one functions internally as an independent supplier working in close collaboration with an internal consumer partner. A private company works with suppliers from both sides of the supply chain as the process is streamlined and valued.

As you can imagine this process involves many different departments, types of suppliers and, of course, multiple step processes. The essence is the management of the overall process from initial discovery to ultimate delivery. More on that later.

Supply chain management involves many individual steps: communication and cooperation between various parts of the process, still missing from our minds when we discuss the words supply chain. It often involves information exchange with suppliers and customer partners. Before we go into specifics, here is a short overview of how supply chain works:

In supply chain around different parts of your supply chain, right at the customer level:

Daniella Barton, an author and chief information officer at Coca-Cola said that public companies like Coca-Cola perform four to five interconnected functions on their supply chain. They’re:

Let’s look at each one of these in turn.

Communication and cooperation with suppliers reveals the suppliers' capabilities, specifications, and an opportunity to gain insight into their processes and practices. It also allows you to discover new products and what’s currently becoming a trend and to coordinate your efforts to buy superior yields and prices.

You can use COMPLY.IO as a tool to monitor and analyze communication with suppliers, check how they signal quality and discover new products they’re interested in.

As a company works towards a goal, it wants to keep the suppliers happy.

3. What are the key components of supply chain management?

Supply chain management is the management of the flow of goods from the initial supplier of raw materials to the final consumer. It involves the coordination of both production and logistics functions. Supply chain management is important because it can reduce costs and increase profits for companies.

So why is supply chain management important? Because it allows you to understand all the steps in the sourcing, production, delivery, and customer service of your products, all while avoiding human error (i.e. bottlenecks and production or inventory errors). It pulls all of this information together in real time, keeping all of your operations in check to minimize risk and ensure quality throughout the supply chain.

How does supply chain management benefit your company? One of the most common ways is by reducing the cost of production. Cost savings can be achieved by contract manufacturing, quality management, or time pricing, where you price items based on quantity or quality (wages and quality assessments). Each of these methods have their advantages and drawbacks, so you need to sort through which is the best for your business.

Another benefit of supply chain management is improving supply chain visibility and control. Having an idea of how your goods get from the source to the end customer, where they ultimately end up, allows you to make informed decisions about logistics and product production. This helps you better analyze the efficiency of your supply chain and pinpoint areas for improvement.

Sounds great, how do I actually find out how my products get to the end consumer? Simple, you have to understand who your customers are, where they shop, and what makes them buy from you. You can find the sources of your products’ raw materials and component components by conducting market research.

As you may have deduced, supply chain management entails understanding and managing what comes after the source. It involves the entire supply chain of your products to the consumer, anywhere that they shop.

4. How do I get started with supply chain management?

Supply chain management is a complex system that involves many different people and organizations. If you’re an entrepreneur, it’s a good idea to learn about supply chain management because it can help you choose the right suppliers, negotiate with them, and ensure that they provide you with quality products at a good price.

Supply chain management is about monitoring your supply chain and maintaining business continuity. Supply chain operators are individuals who are involved in all aspects of the supply chain, from customer purchasing decisions to inventory management, warehousing, and even purchasing from vendors. Often, supply chain managers manage supply to specific customer areas or to individual products.

Supply chain orchestration is the term that is used to describe the process of integrating different people and organizations within the supply chain. Supply chain orchestration includes the operations management team, quality management team, quality system, purchasing and customer service teams, analytical and measurement teams, logistics and supply chain assets, and end-of-sales systems.

Supply chain orchestration is about support, not about managing or directing. If a company needs further assistance from a supplier, it’s not the job of the supply chain manager to look at a vendor’s website and say, “Look, I think I can solve your problem for you. Cut me a deal here or keep your money.” It’s not their job to orchestrate a shipment of wrapped jelly beans from one warehouse to another to get signed off to be ready for shelves.

Supply chain management is complex. Managing your supply chain isn’t like managing your marketing and advertising team’s YouTube channels. It’s not you telling a farmer exactly what to plant or how to market their crops (although that's part of supply chain management). Different teams are involved with different sections of your supply chain. Thanks for reading this article. I hope you get some information.

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