Supply chain management is an essential aspect of businesses across multiple industries. The concept plays a role in manufacturing, health care, retail, and other sectors. But what exactly is supply chain management, and what are some of the basics of how supply chain management works?
What Is Supply Chain Management?
A supply chain encompasses all the activities required to get a business’s products to consumers. The chain starts with sourcing raw materials and ends when delivers bring products to those who will use them. Materials are not always on the move within the supply chain. Sometimes, storage facilities are necessary to hold excess goods until demand increases.
Each part of the supply chain has its own processes and logistical concerns. Professionals must plan for product demand, arrange shipping, anticipate potential hurdles, and think creatively to meet tight deadlines.
Key Principles of a Smooth Supply Chain Management Operation
- A fast supply chain is a more profitable supply chain. In other words, managers have to be able to quickly identify and respond to demand triggers.
- Communication is essential throughout every part of the supply chain. This principle is especially true when extraordinary circumstances arise that demand a departure from normal procedures. Each person who receives an order should confirm that order, while documenting the process so that no missteps in the supply chain occur.
- People matter. Individuals, not any set of rules, are the foundation for a successful supply chain. Keeping people motivated and up-to-date on the factors that affect their work will increase the chain’s efficacy.
- Elements that lag behind don’t belong in the supply chain. If a supplier regularly delivers raw materials behind schedule, supply chain managers should replace the faulty element. The same principle applies if a third-party logistics company starts to slow down the chain.
- Flexibility is a necessity. Supply chain management is a balancing act that requires constant adjustments and evaluation. Managers must analyze data, try to predict demand, have plans for dealing with excesses and shortages, and be able to think creatively to meet deadlines and handle problems.
Jobs in Supply Chain Management
Several types of jobs can be found in supply chain management, but these jobs usually fall into one of two categories: planning or operations. Planning professionals usually work in an office and perform tasks such as creating reports, communicating with customers, and forecasting demand. Operations professionals, however, work in distribution facilities or warehouses. They take a hands-on approach to managing the people and products in the supply chain.
No concrete, definitive process rules a successful supply chain. Each company must decide where to place people within the chain as well as what software tools and third-party service providers to use.
Supply chain management is indispensable for companies both large and small. Staying on top of the flow of products and materials results in a more efficient, more profitable business.
Each person who receives an order should confirm it so the process gets documented and there are no missteps in the supply chain.
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