Supply chain management (SCM) is the management of the flow of goods and services. SCM is the effort by managers to develop and implement supply chains that are as economical and efficient as possible, including the implementation of information systems to manage the complexities of the supply chain.
The supply chain covers everything from production to product, the transformation of raw materials into final products, sourcing materials, final delivery to and from warehouses.
There are key processes that you must take into consideration to effectively manage your supply chain. These are constants across any type of supply chain you are using.
Customer Relationship Management (CRM): CRM is a necessity as every step throughout your supply chain should be oriented towards the customer – otherwise, you wouldn’t have a business to begin with. If no one is buying your product, then there’s no need to produce anything.
Supply chain managers need CRM to gather customer information for marketing and market research, in order to determine what products and services they should be offering now and in the future.
The success of a supply chain is linked to efficiency, which can be traced directly back to the ability of managers to accurately forecast revenue and inventory – this is known as Demand Management.
Demand Management uses analytics to examine historical sales data, orders, shipments, predictive demand patterns and market changes to enable a company to make decisions about inventory and production levels. Essentially, customers buying more means making more, and customers buying less means making less.
Without proper demand management, your supply chain can suffer production delays, inventory surpluses and strained relationships with both vendors and customers. Today, supply chains are generally more reactive than proactive. Supply chain managers may find themselves putting out fires daily due to a lack of visibility into demand and forecasting.
Supplier relationship management is critical to any effective SCM – after all, if you want to sell something, you need someone to produce it. Working with suppliers effectively means establishing solid reports with everyone in the chain. Working with the wrong suppliers can dramatically interrupt the supply chain and lead to soaring costs, massive delays and no products to sell. That is bad for your business.
Order fulfillment involves coordinating with distribution centers, warehouses and 3PLs to get the finished product to consumers. Now that you’ve made something, you need to actually get it in the hands of the people who want it.
Next Steps
Learn more about supply chain management integration in our blog post, SCM Integration 101: Benefits, Essential Integration System Types, and More.