What is Supply Chain Management?

Simply put, supply chain management can be defined as the processes and activities of sourcing raw materials or components a business needs to create a product or service and deliver it to customers.

Good supply chain management, including software, can improve performance and make a business more effective by reducing waste and decreasing costs. Globalization and supply chain management are intertwined, as players in the supply chain often span across countries and even continents. Good supply chain management ensures high quality products and services across differing levels of resources and legislation.

Improvements in efficiency and productivity have a lasting impact on the bottom line of a company. A well-managed supply chain helps to cut excess costs and deliver products to consumers quicker. Nowadays, Big Data affects supply chains as data analysts have access to huge amounts of data on all parts of the supply chain, so can focus on what can be done to optimize it.

According to CIO, there are six core components of supply chain management:

• Planning: Companies must plan and manage resources to meet customer demand. The supply chain must also be designed to ensure it is efficient, and what metrics to use to judge this
• Sourcing: Choosing the right suppliers to provide goods and/or services needed to create a product. This also covers monitoring and managing relationships with suppliers
• Making: Co-ordinating the activities needed to accept raw materials, test for quality, manufacture the product and schedule for delivery
• Delivering: Also known as logistics, this covers many aspects including coordinating customer orders, scheduling and dispatching deliveries, invoicing customers and receiving payments. The delivery process is often outsourced to specialist firms (such as UPS)
• Returning: A network must be in place to take back unwanted, defective or excess products. Defective products are usually reworked or scrapped, whereas unwanted or excess products can be returned to the warehouse for sale
• Enabling: For an efficient supply chain, there are multiple support processes to monitor information. These include finance, IT, HR, portfolio management, facilities, sales, product design and quality assurance