What are the five basic steps of supply chain management?
What are the five basic steps of supply chain management? Businesses today, often define their activities in terms of domestic and export sales. This is typically a short-term and limited view. Short-sighted firms also outline their logistics and supply chains in terms of the warehouse, freight, and other costs. Also, they fail to understand how much SCM impacts their customers and businesses. Best practices in supply chain management process usually lead to growth and prosperity. However, often, the result of all this prejudiced thinking is that these firms trap themselves into being defined as a commodity product provider where price is the key differentiator.
Moreover, since customers today, expect quicker delivery times, most companies have been compelled to re-strategize their supply chain related processes. As a result, implementing supply chain management best practices becomes essential for businesses looking to optimize the transfer of products through their supply chain management process. Following supply chain management best practices can also complement and support business strategy, maximize efficiencies, drive down operational costs, strengthen supplier relationship management, and provide clear purpose to accomplish goals. However, to effectively implement these practices, executives at all points in the supply chain management process must engage in focused planning and process implementation measures. A well-organized supply chain also incorporates sophisticated technologies – right from the connectedness of digital manufacturing and a digital supply chain to analytics and Internet of Things (IoT) technology.
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Here is a look at five supply chain management best practices:
Demand management: One of the top forces affecting SCM today is the need to find a robust omnichannel strategy. The goal of giving customers a seamless online and in-store shopping experience affects every single part of the supply chain, right from sourcing to product delivery.
Internal supply chain: Creating a holistic approach to supply chain management and enabling a collaborative mindset starts inside the company. From procurement to sales, each sector is critical to success. But that success rests entirely on the internal supply chain management process working efficiently. One of the factors that involuntarily disrupts collaboration is the wrong reward system. Incentive systems must identify the need to work together, or people will not feel they can do so.
Getting the macro view: Broadly speaking, the competition among businesses is basically a competition of supply chains. Active movement of goods and materials depends on complex interdependencies working well together, and that requires information. IoT, analytics, and traditional technology, such as ERP, all play a role in surfacing and using the information to gain real insights.
The house of cards factor: The supply chain is an intricate web of interdependencies, and supply chain management best practices recognize the threat of disruption – one against which businesses must have a well-developed strategy. At the centre of this is a collaborative relationship with suppliers and other partners.
Establishing “green” initiatives: It is no longer an option for a company’s supply chain to actively reduce its carbon footprint. Instead, SCM organizations must become sustainable and socially responsible if they hope to thrive or even survive. A best-in-class SCM company should have a measurable framework of procedures and policies designed to enhance the workplace environment.
Success Story
Supply chain management for a leading import and export industry client.
Challenge: The client, a leading player in the import and export industry, was facing predicaments in providing their customers with accurate and reliable information about the expected arrival of their merchandise.
Benefits offered: Helped the client gain greater visibility into the supply chain management process and measured their supply chain capabilities. This consequently helped them achieve over EUR 600,000 in savings.
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