A supply chain features the supply of materials to a manufacturer, the process of manufacturing, and the dissemination of finished goods through a network of suppliers and retailers to consumers. The digital age has paved way to wholesale transformation in commerce where delivery of goods is no longer labor intensive, disorganized and time-consuming. With high speed communication and automated systems, the supply chain has gone from one month, two weeks, to even hours. The strategic alignment of end-to-end business processes aims to achieve market and economic value, as well as helping an organization stay relevant and competitive. Supply chain management (SSCM) is a process aimed to make the above process successful. It is the active planning and management of all activities involved in the supply chain to optimize customer value and realize a sustainable competitive boost (GBSB Global, 2017).
Information is shared throughout the supply chain i.e. with clients and suppliers to facilitate the flow of products by enabling all stakeholders to plan appropriately to satisfy both current and future needs of consumers. Companies are most likely to enhance the flow of goods from distributor to consumer while adapting effectively to changes in demand the more the companies it integrates and collaborates with in its supply chain. Therefore, SCM is an integral part of an organization’s success and to attain customer satisfaction (Council of Supply Chain Management Professionals, n.d.).
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Importance of Supply Chain Management
SCM boosts customer service since customers get the correct product assortment and reliable quality at the right time and place while they also receive right after-sale support services like repairs (CSCMP, n.d.). SCM also reduces operating costs due to reduced purchasing costs, low production costs and reduced total cost of the supply chain. Retailers can supply high inventory products like flat-panel plasma HDTV’S faster from stores hence less inventory costs and deliver materials to manufacturers reliable to avoid delays which might result into increased production costs.
SCM also helps an organization to improve its financial position through increased profit leverage, increased cash flow and decreased fixed assets (CSCMP, n.d.). Reduced supply chain costs translate into stable profits and redesigned distribution networks reduce the use of major fixed assets like warehouses and plants. Due to increased flow of goods to customers, companies realize an increased cash flow. SCM plays significant societal roles which include sustaining human life, improving human healthcare and protect humans from extreme climates. For instance, the 2005 Hurricane Katrina victims in New Orleans, LA were rescued and supplied with meals and water due to supply chains (CSCMP, n.d).
Lastly, supply chain management improves quality of life by providing a base for economic growth through fast exchange of goods and services, improving standards of living, creating jobs in the field of supply chain, decrease pollution by recycling by-products of product supply and decrease energy use (CSCMP, n.d.). Companies are employing best-in-class supply chains that feature a proactive use of big data, flexibility, highly optimized inventory management, compliance, energy sustainability, and customization with process implementation (GBSB Global, 2017). For instance, Unilever, the British-Dutch consumer goods organization is the third-largest supply chain company (according to research by Gartner, Inc.) due to its outstanding supply chain management. Unilever, from 2000, invested in supply chain executives, global procurement processes, organization, technology, and supplier involvement. Three years later, the company registered $14.24 billion savings, making it a leader in the industry of consumer-packaged goods (GBSB Global, 2017).
Key Drivers of Supply Chain
Supply chain is guided by five key drivers which are production, inventory, location, transportation and information (SCM Globe, 2014).
Production- A Company can target to produce a wide range of products by building facilities with big capacity and flexible manufacturing techniques. A company can also develop smaller plants near their clients to shorten the delivery time.
Inventory- This can be achieved when a company stocks high levels of inventory for diverse products to reduce inventory levels especially for those products that don’t sell quickly.
Location- A Company should respond to this by choosing a location that is close to its customer base.
Transportation- Fast and flexible modes of transportation should be considered in a supply chain.
Information- An organization can use technology to collect and share accurate and timely information over the years to enhance its supply chain (SCMC Globe, 2014).
References
GBSB Global, (2017, Feb, 14). What is Supply Chain Management, and Why is it Important?. Retrieved from https://www.global-business-school.org/announcements/what-is-supply-chain-management-why-is-important
CSCMP, (n.d.). The Importance of Supply Chain Management. Retrieved from https://cscmp.org/CSCMP/Develop/Starting_Your_SCM_Career/Importance_of_SCM/CSCMP/Develop/Starting_Your_Career/Importance_of_Supply_Chain_Management.aspx?hkey=cf46c59c-d454-4bd5-8b06-4bf7a285fc65
SCM Globe, (2014, March, 17). Five Supply Chain Drivers. Retrieved from http://blog.scmglobe.com/?p=422
