SCM - Various understanding of it

The importance of SCM was understood at the time of Covid more and recognised by the World as a very complex and crucial function. However, the understanding of SCM is not common to all. For a few it is the Purchasing function, for some, it’s the logistics function, and likewise.

Supply chain management (SCM) is the process of managing the movement of raw materials, parts, and other goods through the manufacturing process, to customer delivery and beyond. It encompasses the planning and management of all aspects of this process, including the acquisition, storage, transportation, and distribution of goods.

Understanding its elements can help companies create a proactive, efficient process that will save time and money while delivering optimal customer service.

1. Demand planning: This element of SCM involves forecasting customer demand and creating supply plans that meet that demand. It involves integrating market insights, supply chain analytics, and customer data to make accurate forecasts about the future. It also looks at pricing and lead times to determine the most cost-effective way to meet customer needs.

2. Procurement: Procurement is the process of buying goods and services from outside suppliers. It involves evaluating vendors, making contracts, and managing inventory. This element also involves managing relationships with suppliers to ensure that the best quality and pricing are met.

3. Inventory management: This element of SCM involves managing the flow of goods through production and into customers’ hands. It includes tracking stock levels, monitoring supplier performance, and establishing inventory optimization procedures. It’s important to pay attention to inventory levels to ensure that customer demand is met while avoiding stock-outs and overstock situations.

4. Distribution: This element of SCM focuses on transporting goods from the supplier to the customer. It involves ensuring that orders are fulfilled in a timely manner and coordinating logistics with warehouses and other third-party providers. This process also includes negotiating rates with carriers and managing any returns and recalls.

5. Performance management: This element involves tracking performance metrics and developing ways to improve them. It can be used to develop strategies for improving customer service, cost reduction, and other areas of the supply chain. This element of SCM can also provide insights for improving processes and creating a more efficient process.

These elements work together to form a comprehensive supply chain management process. By understanding each element, businesses can create a proactive, efficient process that will benefit the customer, supplier, and business alike.