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Understanding Supply Chain Management

supply chain management chart

Understanding Supply Chain Management | Image Source: Google Images

Supply chain management: a competitive advantage

The entire planning and production process, from product development to management software, is referred to as the supply chain and is part of the delivery of a good or service to a third party.

Two streams of supply

We can consider that there are two different flows that make up the supply: physical and administrative (informational).

For the sending and receiving of data, orders, invoices, etc., the administrative flow is required.

The physical flow is the technique of getting the requested item to the recipient by truck, train, boat, etc.

The supply complies with all external restrictions. The first rule is to deliver the goods in accordance with the requester’s preference at the appropriate time, price, and cost.

Read also : How to Manage a Warehouse: The 10-Step Guide to Logistics Management

A competitive advantage

The main objective of better supply chain management is therefore to aim for competitive advantage by optimizing the various processes at work.

What does a standard supply chain look like?

By improving the numerous processes at work, improved supply chain management aims to provide a competitive edge.

Customers, suppliers, and the company are all included in a basic supply chain. For illustration:

  1. Manufacturer of raw materials
  2. Industrial manufacturer
  3. Distributor
  4. Retailer
  5. Customer

It is only possible to improve performance and raise customer satisfaction through the effective management of the many links in this chain.

Two major supply management challenges

Demand and Supply

Understanding Supply Chain Management | Image Source: Google Images

The Amazon Effect

Companies are under pressure as a result of the expansion of e-commerce because customers who want their products delivered on time and around the world must have faster delivery times.

The “Amazon” effect makes all products instantly available to everybody, anywhere in the world.

Companies are improving their supply chains and increasing stock rotations to make sure they have the correct amount of stock at the right time and in the right location in the world, avoiding stock shortages and surpluses in the process. To lower expenses and boost cash flow.

These requirements pressure businesses to consider a supply chain that is adaptable, resilient, and above all, ideal at meeting changing consumer demands.

Towards a responsible supply chain

The supply chain is a significant economic market that has grown in tandem with our society’s globalization and the expansion of trade flows.

Large corporations’ strategy are now centered on social, societal, and environmental challenges, and their supply chains are typically connected to their corporate social responsibility (CSR) efforts.

Organizational practices include selecting partners and suppliers, lowering energy costs and greenhouse gas emissions, adhering to legal requirements and upholding ethical standards.

The challenges of supply chain management for leaders

The three primary difficulties for COOs and supply chain directors in 2022 are as follows, following Roland Berger’s study “The Strategic Challenges of Operations in 2022”:

  1. Demand Instability
  2. Supply disruption risks
  3. Risks of price increases brought on by rising demand and capacity constraints

Therefore, the market and demand uncertainty is a big source of stress for operational managers. In order to address these issues, supply chains must be more digitalized and their resilience must be strengthened.

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