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.