The supply chain management or also known as the “Supply Chain” is the process of managing all the activities that take place in a company for getting products from suppliers to different retail shops and final consumers. It also helps in increasing operational efficiency, reducing costs, and improving inventory management. Supply chain has been around since the dawn of industrialization. However, with the rapid rise of e-commerce and other businesses relying more on digital platforms, businesses have become increasingly dependent on it. Here we will look at what Supply Chain Management is and why it’s important for any business owner? Let’s explore further…
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What is Supply Chain Management?
In a supply chain, the process of moving a product from a supplier to a retailer is known as the Supply Chain Management. The entire chain comprises of the suppliers, distributors, retailers, and the end customers. Each player in the chain plays an important role in the success of the operation. Supply chain is nothing but the chain of activities by which one company takes raw materials and produces finished products. The chain of activities starts when a company gets its raw materials from the various suppliers and ends when it finally reaches the retail level. This chain of operations is known as Supply Chain Management, and a good qualification in supply chain management, such as MBA in supply chain management and diploma in supply chain management are in huge demand.
Why is Supply Chain Management Important?
Supply chain management is an essential function of every business. This is because it is the way in which the business gets its products from raw materials to the customers. You can’t operate a business without proper management of the supply chain. In order to stay competitive in the market, each company will want to increase the efficiency of the supply chain. But, due to increasing competition and presence of new technologies in the market, the demand for Supply Chain Management is increasing. An efficient supply chain ensures that the amount of resources used to produce a product is minimal. It also ensures a quick response time from the suppliers, lower inventory levels, and better customer retention. The demand for supply chain management is increasing due to the fact that digital transformation and e-commerce have increased the role of supply chain management in the business operations.
3 important parts of a supply chain
First Stage: Raw Materials
The raw materials are the materials used in the production of a product. They are sourced from the upstream suppliers or the producers. The raw materials could be minerals, coal, iron ore, etc.
Second Stage – Manufacturing:
In this stage, the raw materials are converted into finished products. The manufacturing activities include raw material procurement, transformation, and processing.
Third Stage – Distribution:
Here the products produced in the manufacturing stages are transported to various distribution centres. From here, the products are finally dispatched to the retailers and customers.
Benefits of a successful supplychain management
Lower Inventory levels:
One of the biggest benefits, as you may also learn in the certification needed for your career in supply chain management, is that the successful supply chain management reduces the inventory levels in the company. This will help the company in saving costs and resources because it would require less space, less manpower, less maintenance, and less inventory for the company.
Increased Efficiency:
Another benefit of a successful supply chain management is that it increases the efficiency of the company. This is because all the activities related to acquiring raw materials, transforming them into goods and dispatching them to the right places are managed by one department.
Improved Customer Service:
The last benefit of a successful supply chain management is that it improves the customer service and engagement. This would be the case when all the products that the customers have ordered will reach them as per their specified time.
Key Takeaways
- Supply Chain management is the process of managing all the activities that take place in a company for getting products from suppliers to different retail shops and final consumers.
- The supply chain has been around since the dawn of industrialization. However, with the rapid rise of e-commerce and other businesses relying more on digital platforms, businesses have become increasingly dependent on it.
- A supply chain is a chain of activities by which one company takes raw materials and produces finished products. The chain of operations is known as Supply Chain Management.
- The biggest benefit of successful supply chain management is that it reduces the inventory levels in the company and increases the efficiency of the operation.
Supply Chain Management is an essential function of every business. This is because it is the way in which the business gets its products from raw materials to the customers. You can’t operate a business without proper management of the supply chain. In order to stay competitive in the market, each company will want to increase the efficiency of the supply chain. But, due to increasing competition and the presence of new technologies in the market, the demand for Supply Chain Management is increasing.
