What is a supply chain?
Firstly we have to know what we mean by supply chain. This is the network that makes up every part of your product, from sourcing materials to making, selling and reaching customers. It is made up of individuals, suppliers, resources and anything else that goes into providing your goods or services, and you would be nowhere without it. A supply chain involves a series of steps and processes to get from raw materials to finished products, with people looking to get the best value and also reliability from each stage. There can be many disruptions and issues from shortages to war that can impact your supply chain so you must also try and allow for these and have contingencies in place. This and other factors affecting your supply chain brings us to Supply Chain Management.
What is Supply Chain Management?
Much like it sounds, SCM attempts to centrally manage and organise the supply chain to reduce costs, deliver products quickly and also avoid problems that can arise. It is so important in today’s market to make sure that every aspect of your business reflects your good name and brand. Lawsuits, bad headlines and product recalls are all expensive and damaging and are best avoided. A good supply chain manager will get you everything you need without anything that might cause you problems later on.
A supply chain has a lot of parts, and at each stage a company can save money through speed and efficiency, or lose money with the lack thereof. Human error, shortages and slow deliveries are just a few of the potential money drains that can appear, so Supply Chain Management endeavours to take control of the logistics of the whole operation in its five key stages:
- The idea, plan or strategy
- Sourcing the raw materials and anything else needed
At each of these stages it is easy to see why efficiency is important. Without the raw materials the product cannot be made. If there is a strike or other delay in the manufacturing or delivery the customer will not receive their product, and if there is not a quick system in place for returns then a small problem can snowball into a much bigger one.
A supply chain manager’s job is to check at each stage that the cost is as low as possible while still providing the correct level of quality, and to try and predict, prevent and otherwise make up for any shortages or problems that may occur.
This can be done using technological systems and improvements, automating certain processes and redundancies, and also using outside companies to take care of everything for you. It can be incredibly helpful to utilise another manager’s experience and expertise in a certain region, or with certain suppliers and materials. They can be in a better position to anticipate potential issues and have ways to respond without the expense of training up someone in house to take charge.
Why is Supply Chain Management important?
Small and large businesses alike face many difficulties today in balancing costs and quality with profits. The supply chain can be a huge drain or it can be an asset depending on how it is managed. In this world of instant 24hour news and a global economy each part of your chain should be above reproach to avoid costly bad press and even legal action.
You also don’t want unhappy customers with poor quality products, or indeed customers who aren’t able to get their products in a timely manner. Shortages and disruptions do happen, and if your supply chain is suitably efficient and well-managed then these should be minimal and not impact your business in the end.
Supply chains have always been a part of businesses, but now it is essential that you manage and control yours in order to get the most for your company. From averting big issues and solving problems to increasing profits and efficiency while decreasing costs and waste, Supply Chain Management is now an important part of your business. Have a look at how your own supply chain could be more effective and less expensive today.