In this article I thought I’ll discuss about the basic of SCM. Generally people refer to this terms as mainly related to those components of a system that deal with the supplier, i.e.purchaisng, stock transfers etc, however this concepts spans way beyond just those on the supplier side, it emcompases all the components involved with in the coordination and movement of goods from supplier to end customers, where manufacturing, wholesaling and retailing functions are also likely to be carried out.
It mainly concentrates on the exchange of information within the different parties in the supply chain network.
The ability to perform the above in the most efficient manner will determine the benefits that can be achieved with a lean and well organized supply chain. Some of the main components you would find in a SCM solution would be as follows :
- Supplier Relationship Management (SRM)
- Transportation Management (TM)
- Supply Chain Event management (SCEM)
- Warehouse Management (WM)
- Planning
- Order Management
- Production
- Purchasing Management
- Demand & Supply Management
With the increasing importance of technology in SCM a lot depends on the ability of the various different technologies used throughout, to integrate and support each other well and most importantly in the context of the industry and environment they co-exist in.
A good SCM system will help bring about the following benefits:
- Improved GP through the reduction in the cost of good sold.
- Improved Stock Management through
- Reduced inventory holding costs
- Reduced Stock Out situations
- Proper use of a JIT System
- Proper planning of purchase related activities.
- Ability to be flexible as per the demands of the markets.
All this will lead to better customer service, thereby ultimately leading to Increased bottom-line profitability too.
Hope this gave you a brief on what SCM is and its main components.
S.Suren
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