Supply Chain Management for your Enterprise
Though supply chain management is often associated with large enterprises, it is equally important for small and medium enterprises
Increasing competition, whether in the domestic or global market, requires a business to become more responsive and flexible to volatile demand conditions. At the same time, efficiency in production is also a business goal and strategy for many concerns. In both these aspects, supply chain management is a valuable tool.
Supply chain management (SCM) entails managing all the processes and functions that are involved in fulfilling the end customer’s demand. For instance, it requires managing raw material suppliers, manufacturers, transporters, warehouses, distributors, retailers, and end customers, who form the supply chain for a business. This supply chain can be simple or complex, depending on the nature of a business and the number of players involved in it.
SCM helps a business to become efficient and/or more responsive to market conditions. Through SCM, you can get more information in real-time on the entire supply process, which helps to cut inefficiencies and needless costs for all the partners in the supply chain. It helps the partners to integrate better with each other.
Components of SCM
Planning: Planning involves building a strategy to manage all the resources that a company needs to fulfill its customers’ demands. To plan for SCM, a company needs to develop metrics to monitor its supply chain.
Sourcing: Every company has some suppliers, such as for raw materials or intermediate products. SCM also involves developing processes and metrics for pricing, delivery and payment, which help to monitor and increase efficiency and improve relationships with suppliers. SCM also requires processes for managing inventory, such as receiving shipments and authorizing payments.
Manufacturing: This component involves developing metrics for measuring the efficiency or otherwise of the manufacturing process. This requires measuring quality, output and employees’ productivity in the various activities of production, packaging and preparation for delivery.
Delivery: Processes required for delivery include building relationships with distributors and retailers, receiving orders, developing warehouses, if needed, and building an invoicing system to receive payments. In SCM, metrics need to be built to monitor these processes.
Customer Service: This involves building mechanisms for customer support and processes for receiving back defective products or excess stock.
Today, SCM software is available that helps to manage all components of the supply chain. However, the first step in implementing SCM is to co-opt all partners in the supply chain in sharing information with each other, and opening some processes that were so far internal to each partner.
For SMEs, another important task is to observe areas of the supply chain, both internally and with partners, where technology can replace manual processing to increase efficiency and productivity.
Since most SCM software is built with large enterprises in mind, SMEs should look for technology partners who can customize the software for their specific needs. Also, for cost-effectiveness in using SCM software, SMEs can look for pricing models that are based on paying per user. They can also use SCM software from application service providers (ASPs), where the software will be available to them on demand over the Internet. This helps to cut down costs of buying software and licenses.
SCM requires SMEs to take a broader perspective of their business, from beyond improving internal efficiency to improving efficiency and minimizing wastage across the entire supply chain. The benefits of this can be reaped by all the partners in the supply chain.