Supply chain management definition

Supply Chain Management

Supply chain management is primarily concerned with boosting supply chain velocity, preserving and encouraging flow, implementing an adequate support structure, and harmonizing operating strategies. Any error in the supply chain can devastate the company's shipping, order fulfillment, and inventory management. Effective supply chain management entails achieving an elusive balance between several factors. The organization expects them to constantly deliver strong results.

Correct Inventories

A successful supply chain can be obtained in a variety of ways. The first crucial aspect of a successful supply chain is maintaining correct inventories. The company must determine the number of specific commodities that must be stored in the silo. The procurement manager should consider year-over-year and month-to-month trends to predict the stock requirement for a given item effectively (Coyle, 2017). The company should avoid falling into habits of too much or too little inventory. Hence, too much can consume a lot of silo space while too little can contribute to delayed orders and unsatisfied customers.

Timely Order Fulfillment

Secondly, a successful supply chain requires correct and timely order fulfillment. Management of orders in a timely and accurate manner can assist the company to prevent backup processes. The incorrectly filled or shipped orders to the wrong clients enhance the likelihood that a company will have to process reship. They also return the amended orders which can bog down an organization’s supply chain and increase operating costs. Furthermore, the company must ensure that correct strategies are implemented to meet high demands of the product during peak times.

Performance Metrics and Insights

Besides, the firm must keep performance metrics and insights to enhance its supply chain tactics. It is not easy to supply if there are no granular and clear insights on the performance of the brand. Performance tracking is an essential part of determining areas where the product is doing well and areas that need improvement. When a business is aware of gaps in its operations, the management will be better equipped to establish and execute strategies for delivering measurable improvements.

Technological Innovations in Supply Chain

Currently, there are various technological innovations in the supply chain that have substantially changed company operations. Hi-tech supply chain management has transformed modern business encouraging better visibility and tracking (Coyle, 2017). Information technology enables real-time monitoring of the whole chain from order placement, order fulfillment, invoicing to shipping. The dynamism in technology includes Radio Frequency Identification (RFID) technology. It allows an organization to monitor all items from production to supply effectively. Advanced weighing technology permits companies to ensure trucks carry maximum weight from the loading zone. Transport management software assists in integrating all operations from one panel thus enhancing the ability to monitor distribution, manage shipping and create electronic bills.

Strategic Sourcing

Strategic sourcing can be a foundation for significant changes in the supply chain thus leading to better financial benefits. With the challenging tasks that face logistic firms, enhancing sourcing and procurement strategies. Strategic sourcing enables logistic firms to cultivate long-term and positive relationships which improve supply stability (Venkatesan & Goh, 2017). Strategic management is also helpful in risk management since logistic firms can easily identify potential risks. There include financial problems and resolve them quickly. Logistic firms can also consistently collect data to make informed decisions on future improvements.

Supply Chain Performance Measurement

Supply chain performance measurement promotes a company to determine if its supply chain has degraded or improved. There are two approaches to performance measurements; quantitative and qualitative measures. Quantitative measures include assessing cycle time which includes supply chain lead time and order-to-delivery lead time. Short lead time shows effective performance while longer lead time shows inefficient performance (Pandey & Dubey, 2011). The company can also access customer service level which includes backorder level, stock-out rate, and order fill rate.

Conclusion

In conclusion, an effective supply chain is integral to business success. A successful supply chain involves various approaches including maintenance of accurate inventory records. Technological innovations such as RFID and GPS system have significantly changed supply chain operation. Firms should encourage strategic sourcing for long-term business relationships.

References

Coyle, J. J. (2017). Supply chain management: A logistics perspective. Cincinnati, OH: South-Western College Pub.

Pandey, M., & Dubey, R. K. (2011). Performance measures in supply chain management. Indian Journal of Applied Research, 4(2), 14-17. doi:10.15373/2249555x/feb2014/91

Venkatesan, P. S., & Goh, M. (2017). Strategic sourcing under supply disruption risk. In Y. Khojasteh, (Ed.), Supply chain risk management (pp. 179-200). Singapore: Springer. doi:10.1007/978-981-10-4106-8_11