Supply Chain Management Online Courses

Logistics and supply chain management are terms you would frequently come across in the field of business. A supply chain refers to the network of organisations, individuals, activities, resources, and technology involved in producing and selling goods and services. It includes everything, from the manufacturer sourcing raw materials from the supplier to the final delivery of products to the end-user. Thus, a supply chain covers all aspects of the production/manufacturing process.

The activities at each stage of production, the conversion of natural resources into usable materials, information and material flow, human resources, and all other factors that go into the making of the finished product or service are within the supply chain. Understanding the supply chain is crucial for optimising the overall functionality of business operations, and that’s where supply chain management comes into the picture.

In today’s dynamic and competitive business landscape, supply chain management is essential and indispensable to a company’s success and contributes significantly to customer satisfaction.

Supply chain management (SCM) refers to the process of handling the flow of goods and services from their source to their destination. It includes all the processes, activities, and resources that transform raw materials into finished products for delivery to the end consumer.

Supply chain management coordinates and integrates the product flow, information flow, and flow of finances across the different stages of the supply chain within and among companies. The critical elements of SCM include planning and forecasting, purchase, product assembly, movement, storage, distribution, sales, returns, and customer service.

SCM actively streamlines a business's supply-side activities to reduce the time-to-market and deliver products to customers more efficiently while gaining a sustainable competitive edge in the market. Careful supply chain management can benefit businesses by reducing costs, increasing revenues and delivering products faster, better and cheaper.

When done right, supply chain management enables businesses to navigate market demands optimally and cater to customer expectations. Whether operating globally or locally, no company dealing with a supply chain can sustain itself without efficient SCM.

Let’s understand why supply chain management is vital to businesses:

1. Improved supply chain visibility

The supply chain forms an integral part of a business, and visibility into it has far-reaching consequences on business success. A lack of synchronisation and coordination in the workflow is often the result of the workforce's poor understanding of the activities beyond their own position in the supply chain.

It not only leads to reduced employee performance but also impacts the efficiency and productivity of the production process. SCM increases the transparency and visibility across every stage of the supply chain, helping employees across various departments communicate, collaborate and work in sync.

2. Reduced operating costs

A proper supply chain management system helps reduce operating costs by cutting down on purchasing costs, production costs and the total supply chain cost. Through efficient SCM, retailers can reduce purchasing costs by quickly distributing expensive products and eliminating holding costly inventory. Likewise, manufacturers can rely on efficient SCM to ensure reliable materials delivery to assembly plants and avoid any material shortage that could hike production costs. A proper SCM system helps manufacturers and retailers reduce the total supply chain cost while meeting customer service goals.

3. Better customer service

Customers expect that they get the correct products delivered to them in the shortest possible time and at the correct location. Not just timely delivery, customers also expect quick and efficient after-sales service with a minimal waiting time. While it may seem impossible, proper supply chain management is the key to stellar customer service, from timely delivery to efficient after-sales support. With a proper supply chain management system, businesses can have sufficient inventory in the correct warehouse location to ensure speedy product delivery to customers. SCM will also ensure prompt customer support or quick replacement of defective products.

4. Improved finances

Most importantly, proper supply chain management improves a business's financial position. With decreased supply chain expenditures, firms can dramatically increase their profit margins in the long run. Moreover, supply chain management minimises using bulky fixed assets such as warehouses, plants, vehicles and other expensive infrastructure. SCM helps redesign the entire supply chain network with optimum resource utilisation while maintaining product standards and speeding up product flows to customers. Thus, it helps increase the cash flow since firms take lesser time to make and deliver products to the customer’s doorstep.

A firm must first understand the objectives and purpose of supply chain management before it works its way into developing SCM strategies. Below we discuss the five main goals of supply chain management that a business must consider:

1. Improving fulfilment efficiency

At its core, the objective of SCM is to ensure that inventory is readily available to meet dynamic consumer demands. Matching supply and demand is crucial, and supply chain professionals must be equipped to collaborate and standardise processes to achieve maximum resource productivity and eliminate duplication of effort. With inventory levels at par with market demands, firms can reduce waste, minimise expenses, and boost supply chain efficiency.

2. Increasing flexibility

The business landscape is ever-volatile, with numerous market factors influencing how companies function and survive. Such volatility calls for the ability to adapt to change and survive the challenges of changing customer expectations, economic crises and globalisation. Hence, one of the primary goals of investing in SCM innovations is to create the groundwork for a company to scale up or down its operations in response to abrupt changes and make supply chains resilient to interruptions.

3. Creating customer value

The very reason supply chains exist is the customer - the lifeline of every business. Therefore, one of the basic objectives of a supply chain management system is to create value for the customer constantly. Creating and increasing customer value involves developing market-driven strategies based on a sound understanding of customer expectations and demands. It also applies to developing SCM approaches and capabilities to achieve higher quality customer service.

4. Increasing financial performance

One of the fundamental objectives of managing the supply chain is to improve a company’s financial performance. While traditional cost-cutting approaches typically focus on optimising inventory levels and fulfilment automation to reduce carrying, freight and labour costs, modern SCM emphasises both cost control and profit generation. Firms today apply SCM strategies to daily operations to maximise competitive advantage through increased differentiation, market penetration and sales.