SCM -Supply chain management is a system of organizations, people’s activities, and information and resources that is involved in moving a product or service from Suppliers to Customers. Supply chain activities include a Finished product or raw material that is delivered to the end customer. supply chain management works relentlessly to secure its resources with the best value.
Successfully incorporating supply chain management leads to a new kind of competition in the global market, where competition is not taking place as a company-vs-company, but as a supply-chain-vs-supply-chain. The primary purpose of supply chain management is to meet customer demands through the most efficient use of resources, including delivery capacity, inventories and labor.
As a rule, a supply chain management matches demand with supply. Supply chain management has to end the problem by collaborating with suppliers in various aspects; The strategy is to create a balance between lowest material cost and transportation.
Implementing just-in-time techniques to optimize manufacturing flow and maintain the right mix of Factories and Warehouses to serve Customer Customer is the job of supply chain management.
In the 1980s, the term supply chain management (SCM) was developed to integrate business processes through Main Suppliers to the end user.
The real idea behind SCM is that companies and companies should involve themselves in a supply chain by giving and taking information about the fluctuations and production capabilities of the corporate market.
why supply chain Management is important?
(SCM) Supply Chain Management works to advance the (SCM) supply chain profession by connecting the practitioner and educating the practitioner and developing the practitioner.
(SCM) Supply Chain Management is considered an integral part of most businesses and is essential to the success of the company and customer satisfaction.
(SCM) Customers are confident and hopeful that they will get the right product, right quality and quantity delivered.
(SCM) increases profit leverage – companies value supply chain managers because supply chains help control and reduce costs. This leads to a dramatic increase in the company’s profits.
(SCM) Increases cash flow- (SCM) increases cash flow – as the firm or company value (Supply Chain Managers) supply chain managers do, as they speed up product flow to customers. For example, if a firm can create and deliver a product to a customer in 10 days instead of 70 days, it can invoice the customer 60 days in advance.
Small (SCM) supply chain management also plays an important role in society. SCM also uses knowledge and capabilities to supply medical missions, and also to conduct disaster relief operations and handle other types of emergencies.
Whether dealing with day-to-day (product flow) or unforeseen natural disaster, it helps in diagnosing all these problems.
(SCM) Social Role
(SCM) helps sustain human life – humans depend on supply chains to meet basic needs such as food and water.
(SCM) Improves Human Healthcare – Humans depend on supply chains to deliver medicines and healthcare. The supply chain also helps during a medical emergency – for example, medical rescue helicopters quickly deliver accident victims to hospitals for emergency medical treatment and provide the necessary medicines and equipment for treatment (SCM). is.
Supply chains design all supply chains in a society like supply chain professionals and manage Transport, Warehousing Warehousing, Inventory management Inventory Management, packaging Packaging and Logistics Information Logistics Information. Which creates a lot of employment in the supply chain sector.
Supply chain management is an important process as you know, because an optimized supply chain results in lower costs and a much faster production cycle. In today’s blog, we will learn in detail about the three root concepts of supply chain management.
- System Concepts: it emphasizes interdependence not only between function within an organization and also among multiple organization that collectively deliver products and service to the customer for example those that Concept the supplier’s buyers from result in unintended losses and wastages.
A focus on efficiency and cost reduction at individual function level to exclusion of its impact on other function may lead to increased costs at another level within the organization, resulting in sub-optimized performance in the level of service provided to the customer beside lowering the overall value delivered to the end user.
For instance, companies-where production drive sales- may engage in large production runs to minimize set-up costs, without realizing the cost involved in carrying large inventories of finished goods that result from such an approach and which impact the profitability of the company.
Similarly, a failure to appreciate the inter-company interdependence can have adverse impact on the performance of the entire chain.
In situation where transporter linking manufacture and wholesaler choose to consolidate loads to utilize the vehicle carrying capacities to the maximum, and thereby save on transportation costs, may cause delays in replacement, resulting in loss of sale and revenue that may exceed the saving in transportation costs.
What matters therefore is not the functional-level performance or the link-level performance in the chain but the collective performance of the entire chain, which warrants identification and removal of both the intra and inter-company wastages and non-value added activities from the entire material flow.
- Total cost concept: Flowing directly from the realization the businesses ought to be viewed as integrated systems an interconnected chains or networks involving multiple links, it has to be appreciated that value delivered to the customer can be maximized only if the total cost incurred by all the links in the chain or network serving the customer is minimized.
Once again we fin that function-level cost reduction or link-level cost minimization is of little consequence if the overall cost to the customer remains high, making the chain as a whole non-competitive the concept emphasizes the need for inter-company co-ordination,
co-operation, and collaboration in all activities from design and development to manufacturing and distribution to optimize the total cost, and thereby, maximize the value delivered to the customer.
- Trade-Off Concept: the ‘’trade-off’’ concept enjoins upon the decision makers to explore the possibilities of choosing among alternatives or combination of alternatives in fulfilling a supply chain objective to minimize cost.
Faster transportation through a more expensive mode may be acceptable if it helps lower inventories carried and increases responsiveness to a time sensitive customer.
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