What is Supply Chain Management

Supply chain management is a process to achieve operational efficiency in supply chain. It is active management of the supply chain to achieve maximum customer value and achieve a competitive advantage. It is also a conscious effort on part of the supply chain department (or supply chain company) to develop/run its supply chain in the most efficient and effective way.

Supply chain covers everything from sourcing, logistics, production, to the information systems that coordinate these activities.

Two streams of thought in supply chain management

According to SAP partners in Singapore , supply chain management is based on two ideas. First of all, every product that reaches a consumer is a cumulative effort of many organizations. Together, they are called the supply chain.

The second idea is, even though supply chains have been in existence for a long time, most companies tended to ignore it and they focus on what happens inside their four walls. Only some companies understand and even less companies are managing their supply chain. The result is an ineffective and disjointed supply chain.

On the other hand, supply chain management has many advantages. It can have an exponential and significant effect on your business. Here are three advantages of supply chain management.

Advantages of supply chain management

Provides a boost to customer service- Supply chain management can help you improve your customer service by ensuring that the right product or product assortment in the right quantity reaches the customer in time. It can also ensure that the product is available where the customer expects it. It will also help you provide better after-sale support.

Assists bottom line- Companies who have adopted supply chain management have reported a tremendous improvement in their bottom line. Supply chain managers are a valued lot because they help companies decrease the usage of fixed assets such as warehouses, transportation vehicles and plants. Supply chain management also increases cash flow because by expediting product deliveries, you also receive profits quickly.

Streamlines supply chain- Supply chain management can streamline everything- whether it is day to day product delivery or an unexpected natural disaster. By utilizing SCM tools and techniques, you can gain the ability to diagnose problems, reduce disruptions and even determine how to move products efficiently in crisis situations.

SCM products from SAP can help you optimize and accelerate your end to end supply chain process. It not only enables you to integrate processes but also helps you enforce compliance for supplier-side and supply-side requirements.