What Is Supply Chain Management?
Supply chain management is management of the flow of goods, data, and finances related to a product or service, from the procurement of raw materials to the delivery of the product at its final destination. This has become increasingly more crucial to the success of business operations over the past few years.
Great supply chain management provides clarity of movement from one point to another and delivers it on time. It ensures that the product is of good quality, available when customers need it, and cost-effective for companies.
How Does Supply Chain Management (SCM) Work?
The process of SCM can be divided into three flows:
The product flow: This flow concerns the movement of products from the supplier to the customer. It involves planning and organizing how products will move through the production, storage, and delivery processes. This flow also ensures that all products meet customers’ expectations.
The information flow: This flow oversees how orders are received and communicated with suppliers, customers, and other stakeholders. It keeps track of information needed on the product flow, such as price, quantity, and timing. The product and finance flow relies on the accuracy of the information flow.
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The finance flow: This flow is the financial aspect of supply chain management. It deals with payment transactions between suppliers and customers. It also tracks cash flows, payments, settlements, and currency conversions.
What Are the Five Parts of Supply Chain Management?
Logistics and supply chain management consist of five distinct parts, and these are:
Planning: This part forecasts customer demand and planning for production, inventory control, and transportation.
Sourcing: This is the process of finding, evaluating, and selecting suppliers who will provide the goods and services needed.
Manufacturing: This is the production and assembly process of goods from suppliers and components.
Delivering: This is the process of getting goods to customers on time. This includes transportation and logistics, inventory management, and order fulfillment.
Returning: Customers don’t always keep their products. Returning is the process of handling damaged or defective items, returns and refunds, and reselling them.
How Can You Improve Your Supply Chain?
If you’re suffering from a disorganized supply chain, here are a few tips to help you improve it:
Establish better information flow: As mentioned, the information flow is vital for the other two flows to function correctly. It’s essential to have a clear line of communication between suppliers, customers, and stakeholders.
Outsource other processes: For businesses with limited resources, outsourcing certain procedures can help them streamline their operations. Outsourcing tasks like inventory management and order fulfillment can save time for core business functions.
Utilize supply chain management software: Technology can be a great way to automate and track processes. Good supply chain management software will help you monitor the product, information, and finance flow in real time.
Supply Chain Management Solutions
BlueGrace’s end-to-end logistics solutions help businesses improve their supply chain management for a better outcome. Make your supply chain more effective and keep your customers satisfied with BlueGrace.
See how your business can leverage technology to optimize your logistics.
See how your business can leverage technology to optimize your logistics.
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