Introduction to Logistics Supply Chain Management
Definition of Supply Chain Management
Supply chain management (SCM) is the monitoring and optimization of the production and distribution of a company’s products and services. The objective of SCM is to improve efficiency for all processes involved in turning raw materials and components into final products and then getting them to the consumer. Effective SCM can help streamline a company’s activities by eliminating waste, maximizing customer value, and gaining a competitive advantage in the marketplace.
Importance of Supply Chain Management
Supply chain management is important because it can help a business achieve its business objectives. For instance, controlling manufacturing processes can improve product quality, reducing the risk of recalls and lawsuits. In turn, this can also help to build a strong consumer brand. On the other hand, control over shipping procedures can improve customer service by avoiding costly shortages or periods of inventory oversupply. Overall, supply chain management provides several opportunities for companies to improve their profit margins and is important for large businesses and international operations.
Key Components of Supply Chain Management
There are 5 phases of Supply Chain Management.
- 1. Planning: The first step in SCM usually begins with planning. The goal is to match supply with customer and manufacturing demands. Companies must try to predict what their future needs will be and act accordingly. Large businesses often rely on enterprise resource planning (ERP) software to help coordinate the process.
- 2. Sourcing: Effective SCM processes rely heavily on strong relationships with suppliers. Sourcing entails working with vendors to supply the materials needed throughout the manufacturing process. Different industries will have different sourcing requirements. SCM is especially critical when manufacturers are working with perishable goods.
- 3. Manufacturing: Using machinery and labor, the raw materials the company has received from its suppliers are transformed into something new. This final product is the ultimate goal of the manufacturing process, though it is not the final stage of SCM.
- 4. Delivery: Once products are made and sales are finalized, a company must get those products into the hands of its customers. A company with effective SCM will have efficient logistic capabilities and delivery channels to ensure timely, safe, and inexpensive delivery of its products.
- 5. Returns: The SCM process concludes with support for the product and customer returns. The return process is often called reverse logistics, and the company must ensure it has the capabilities to receive returned products and correctly assign refunds for them. Returns can also be a valuable form of feedback. Without addressing the underlying cause of a return, the SCM process will have failed, and returns will more than likely persist into the future.
Key Concepts in Logistics
What is Logistics?
Logistics refers to the overall process of managing how resources are acquired, stored, and transported to their final destination. Logistics management involves identifying prospective distributors and suppliers and determining their effectiveness and accessibility.
Difference Between Logistics and Supply Chain Management
While closely related, “logistics” refers specifically to the physical movement and storage of goods within a supply chain, focusing on transportation, warehousing, and distribution, while “supply chain management” encompasses the entire process of managing the flow of goods from raw materials to the end customer, including sourcing, manufacturing, and distribution, taking a broader strategic view beyond just logistics operations.
Tools and Technologies in Logistics
Enterprise Resource Planning (ERP) Systems
Enterprise resource planning (ERP) refers to a type of software that organizations use to manage day-to-day business activities such as accounting, procurement, project management, risk management and compliance, and supply chain operations. A complete ERP suite also includes enterprise performance management, which is software that helps plan, budget, predict, and report on an organization’s financial results.
Warehouse Management Systems (WMS)
A warehouse management system (WMS) is a software solution that offers visibility into a business’ entire inventory and manages supply chain fulfillment operations from the distribution center to the store shelf.
Transportation Management Systems (TMS)
A transportation management system (TMS) is a logistics platform that uses technology to help businesses plan, execute, and optimize the physical movement of goods, both incoming and outgoing, and making sure the shipment is compliant, and proper documentation is available. This kind of system is often part of a larger supply chain management (SCM) system.
Roles and Responsibilities in Supply Chain Management
Supply Chain Manager
Supply chain managers are responsible for overseeing the import, export, and oftentimes the creation of raw materials or finished products for a company. They monitor the lifecycle of the product manufacturing process, ensuring the factories have enough supplies. They manage the distribution and product flow from factory to warehouse.
Procurement Specialist
A procurement specialist facilitates purchases from outside suppliers to keep a business running. Their primary responsibilities include researching key suppliers, negotiating purchase agreements, and ensuring all products and materials meet company standards.
Logistics Coordinator
A logistics coordinator manages the flow of goods into and out of a facility, from procurement to delivery to the customer. They are responsible for ensuring that products are moved efficiently and quickly through the supply chain.
Conclusion
The Future of Supply Chain Management
Supply chain management is a crucial part of the B2C and B2B business models and can dictate the future of a business’ health. As with everything else though, the future of supply chain management is expected to be characterized by increased use of technology, greater resilience, and a focus on sustainability. Some of the advances will include:
- Digitization: Artificial intelligence (AI) and machine learning (ML) will automate tasks, improve decision-making, and increase visibility. AI-powered analytics will help with demand forecasting, inventory management, and logistics.
- Blockchain: Blockchain technology will increase transparency and security in transactions. This will be especially important for industries like pharmaceuticals and luxury goods.
- Employee safety: Companies will need to prioritize employee safety, including redesigning warehouse layouts, providing PPE, and evaluating sick leave and wellness policies.
If you have any questions on how Syfan can help with your supply chain management or logistics, contact us today.