Supply Chain Management (SCM) is very critical to the success of any business organization. It involves the management of the movement of products or services of business organizations. It begins with the accumulation of raw materials, then moves towards required processing on materials to convert them into finished goods and further it involves making the product available for sale and finally concludes at the delivery of the product to the end consumer.
Supply Chain Management is a very simple phenomenon but one cannot ignore the value of supply chain in the company and the benefits that can be achieved by the efficient management of the company’s supply chain. Manufacturing a state of the art product is not enough in this fast-paced growing business world.
In order to create customer value and follow a customer-driven manufacturing approach a company must work in ties and partnerships with key suppliers, sellers and resellers. Building long term customer relationships is important to earn brand equity, but to compete in the global world economy making long term trustworthy relationships with all the partners along the supply chain, ensures long term stability of the product and the company.
Understanding Supply Chain Management
The major role players in Supply Chain Management:
Suppliers – Supply the raw material to the manufacturer for processing.
Manufacturers – converts raw material into finished goods and deliver them to Distributors.
Distributors – take delivery of finished goods from the manufacturer for distribution among Retailers.
Retailers – sell the product to the customer.
Customer – Uses the finished product, a customer may be an individual or a business entity.
Importance of Upstream and Downstream
A firm cannot operate on the local level due to the cut-throat competition on a global scale. In order to provide value to its customers and win the market share, the company must understand the value of the supply chain management and its objectives. To successfully manage the supply chain, they must understand the flow of information, product and funds. The basic objective of the supply chain is to take care of the upstream and downstream partners.
Managing the upstream of the supply chain consist of the network of the organization or suppliers that deliver the raw materials, components, information, data, and basic funds that are needed to produce the goods and to deliver the services.
In the conventional form of marketing, the marketers have given more importance to the downstream patterns that include the marketing and distribution channels. The marketers have a vital connection with the market channels, whole-sellers, dealers, retailers and its customers. The advancements in the business world and the changes in the global economy have contributed a lot to the establishment of supply chain networks.
Customer Value and Supply Chain Management
The ultimate goal of Supply Chain Management- SCM is to create long term sustainable customer value by identifying the basic human desires and respond to those target markets by delivering the quality products while organizing the complete flow of resources.
The end-users will have a different perception of the value relative to the substitute products offered by other brands or producers depending upon their preferences, taste, geographical proximity, income and many other factors that influence the buying power of the customer. SCM can be managed in such a way that it generates value for the end consumer and yields long term brand equity for the product.
A Loyal Customers is the ticket to profit, Ensures a brighter future, Foundation of the sustainable business. The objective of a business is to produce efficacy in the supply chain process by controlling the suppliers and distributors and creating a win-win situation between the manufacturer and both the streams of the chain.
The Finished Products that come into the market place are the result of the efforts of the organization. The firm can manage the Supply Chain efficiently by having tight control over the procurement, production, market channels and retail.
Globalization and Supply Chain Management
The impact of globalization on SCM has created a new era for the marketers and the end consumers. In this interconnected world, SCM has many challenges and opportunities. The Marketers now are needed to be very proactive as the end-user today is very much informed and clear about his needs and wants and how those needs can be fulfilled. It is no longer a demand and supply rule as so many options and substitutes are available in the markets.
Globalization has increased the complexity of Supply Chain management. Increased Global Processes require Increased Coordination at a global scale to compete even in a Niche. Procurement, Outsourcing, Physical distribution, Commercialization and workflow management at a global scale require a more advanced Global Supply Chain management. Organization cannot ignore the Global economic Trends, Global Competition; Competitive strategically efforts and technological advancements in order to grab market share in other countries.
Companies have gone global with Supply-chain Management (SCM). A firm can manufacture its products in one continent and market it into another part of the world. Globalization has changed the way of organization management and without effective implementation of Supply Chain Management (SCM) operational efficiency cannot be achieved. Whether it is a business endeavor, any relief program, or disaster management program, only an effective Supply chain management program can produce the required results.
Hello everyone! This is Richard Daniels, a full-time passionate researcher & blogger. He holds a Ph.D. degree in Economics. He loves to write about economics, e-commerce, and business-related topics for students to assist them in their studies. That's the sole purpose of Business Study Notes.
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