What are supply chains and their relationship to improving the management of your business?
A supply chain is a network of all the people, organizations, resources, activities, and technology involved in creating and selling a product. The supply chain includes everything from the delivery of source materials from the supplier to the manufacturer to its final delivery to the end user. The part of the supply chain involved in bringing the final product from the manufacturer to the consumer is known as the distribution channel.
A supply chain is a network of all the people, organizations, resources, activities, and technology involved in creating and selling a product. The supply chain includes everything from the delivery of source materials from the supplier to the manufacturer to its final delivery to the end user. The part of the supply chain involved in bringing the final product from the manufacturer to the consumer is known as the distribution channel.
What is supply management?
Supply chain management (SCM) is the oversight of materials, information, and finances as they move in a process from supplier, to manufacturer, to wholesaler, to retailer, and then to the consumer. The three main flows of the supply chain are product flow, information flow, and money flow. These occur across three main phases: strategy, planning and operation. SCM involves coordinating and integrating these flows within and between companies.
What are the main supply chain models?
Many types of supply chain models are available. Which model a company chooses depends on how the company is structured and what its specific needs are. Here are some examples:
Continuous Flow Model: This traditional supply chain model works well for companies that produce the same products with little difference. The products should be in high demand and require very little remodeling. This lack of volatility means that managers can streamline production times and maintain tight control over inventory.
Quick Chain Model: This model works best for companies that sell products based on the latest trends. Companies using this model need to get their products to market quickly to take advantage of the prevailing trend.
The flexible model: The flexible model is often used by companies that make seasonal or holiday goods. These companies experience sudden spikes in demand for their products followed by prolonged periods of little or no demand. The flexible model ensures that they can prepare quickly to start production and close efficiently once demand tapers off.
The importance of supply chains
The main reasons why supply chain management is important include:
Lower costs
Supply chain managers often focus on minimizing the costs incurred at all steps within the supply chain. Improving production processes, relationships with suppliers, and inventory management are some of the ways supply chain managers can try to reduce costs further. The overall benefit of reducing costs throughout the supply chain is an increase in the company's profits. Even lowering the cost of items by a few cents can result in millions of dollars in savings if you do so
interconnected supply chain
Consumers, distributors, producers, and suppliers are constantly in contact with each other as materials and components are transformed into finished goods that end up in the hands of consumers. It is therefore essential for supply chain managers to focus on visibility and communication between all components as well as on the growth of their organizations, partnerships and outsourcing.
Transfer of information and communications
Supply Chain Management (SCM) is essential to the foundation of all societies. Effective communication and transmission of information in real time is a necessity for establishing a strong supply chain. This starts by building strong relationships between all components of the supply chain and making sure that communication is easy and that all parties are aligned with a common goal. Because information flows backwards from the end consumer to the supplier, supply chain managers must minimize any delays or errors in information being passed from one chain link to the next.
Better customer service
Effective supply chain management can directly improve customer service. This is because SCM processes will ensure that the right quantity of the right items are delivered at the right time. An interconnected network of suppliers and distributors will reduce delays and improve customer satisfaction. In addition, supply chain management will typically increase visibility and allow both customers and customer service personnel to know the status of each order at all times.
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