SUPPLY CHAIN MANAGEMENT- Meaning of Supply Chain
Supply Chain Management is defined as the systematic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long term performance of the individual companies and the supply chain as a whole.
A supply chain is the network of all the individuals, organizations, resources, activities and technology involved in the creation and sale of a product. A supply chain encompasses everything from the delivery of source materials from the supplier to the manufacturer through to its eventual delivery to the end user.
Supply Chain Management ensures that the right materials, services and technology are purchased from the right sources at the right time, in the right quantity. It also helps in providing the best customer service in a cost efficient manner.
OVERVIEW OF SUPPLY CHAIN MANAGEMENT
- Supply Chain Management (SCM) is one of the key areas within the business consulting workgroup that helps develop and implement new supply chain.
- The management of a supply chain of goods as a process from supplier of raw materials or components to the manufacturer, to the distributor to the wholesale buyer to the end customer.
- The management and control of all materials and information in the logistics process from acquisition of raw materials to delivery to end user.
- SCM is the management of the entire value added chain, from the supplier to manufacturer right through to the retailer and the final customer.
- SCM is that set of skills and disciplines, including those of IT, which shepherd a product from its original design to its ultimate delivery to the buyer.
- It is a strategy where buyers and sellers collaborate to bring greater value to the customer. The collaboration includes supply chain planning and supply chain execution activities.
- SCM looks at the entire supply chain of a company to optimize the flow of information and materials between internal and external suppliers, production, distributors and customers.
ROLE OF LOGISTICS IN SCM:
The main role of logistics in supply chain management is primarily to increase the overall value of each delivery, which is identified by customer satisfaction. This means that the reduction and optimization of labor resources must be tied in with keeping up a certain level of quality customer service. This problem is solved both by reducing the total labor resources (primarily by eliminating unnecessary chain links), and by introducing automation solutions.
Logistics is an essential component of supply chain management. It involves planning , carrying out the management of goods, services and information from the point of origin to the point of consumption. The dictionary meaning of logistics is the branch of military science and operations dealing with the procurement, supply and maintenance of equipment, the movement of personnel, the provision of facilities and the related matters. Logistics is about moving materials or goods from one point to another- logistics being the servant of design, productions and marketing.
Inbounds logistics covers the activities concerned with obtaining materials and their handling, storing and transporting them while the outbound logistics covers the activities concerned with collection, maintenance and distribution to the customers. Other activities such as packing, fulfilling orders warehousing, managing stocks and maintaining the equilibrium between supply and demand.
FUNCTIONS OF LOGISTICS WITHIN SUPPLY CHAIN MANAGEMENT:
- Warehouse design and management.
- The formation of packages.
- Transportation of products.
- Working with customs.
- Working with intermediaries (third party).
- Working with written off and returned goods.
OBJECTIVES OF LOGISTICS WITHIN SUPPLY CHAIN MANAGEMENT:
- Minimization of enterprise expenses.
- Consolidation of traffic volumes.
- Improving the quality of service.
- Reduction of actual losses and reduction of possible risks.
- Minimization of the need for intermediary services.
- Supporting goods with the necessary documentation.
- Timely response to changing market demands.