Supply Chain Management - Explained
What is Supply Chain Management?
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Table of ContentsWhat is a Supply Chain? What is Supply Chain Management (SCM)?Operations Management vs Supply Chain Management?What is Business Logistics Management?
What is a Supply Chain?
A supply supply chain, also known as a "Supply Network", is a pattern of temporal and spatial processes carried out at facility nodes and over distribution links, which adds value for customers through the manufacturing and delivery of products.
It comprises the general state of business affairs in which all kinds of material (work-in-process material as well as finished products) are transformed and moved between various value-added points to maximize the value added for customers.
What is Supply Chain Management (SCM)?
Supply chain management (SCM) refers to a set of activities that plan and control the flow of goods and services. It explains the coordination and execution of activities needed to maximize customer value and achiever desired levels of outputs.
SCM describes the management of all the processes involved in the production of good and services. This ranges from product development to the realization of final products. SCM also refers to the management of processes that turn raw materials into their final products. Suppliers use SCM to strengthen their supply chain and also add values to their customers amidst competition from other suppliers.
Supply chain refers to the totality of technologies, resources, individuals, organizations, activities, processes, information and procedures that resulted in the production of a good or service. Hence, a supply chain describes the combination of things involved right from the delivery of raw material and how the material is transformed into a finished product that can be marketed to a set of buyers or consumers. It is the network of processes that a product goes through to before it is eventual delivered to the end user.
SCM enables companies keep track of their inventories, cut production cost, achieve fast distribution of goods and services and also enhance the development of the company. There are many processes, factors and procedures that sum up to how a raw material is transformed or manufactured into a product.
Operations Management vs Supply Chain Management?
Operations management, typically, focuses on improving processes within an organization, whereas supply chain management uses and advances theory, tools, and practice for operations across organizations.
Of course, many of the methodologies of relevance and application in operations management can be transferred to supply chain management.
What is Business Logistics Management?
The terms supply chain management and business logistics management (logistics) seem to be synonymous. However, logistics is just one part or element of the entire supply chain process.
Logistics involves following a specific plan to control, transport, and store goods. In simple terms, logistics management begins with the raw materials and ends with the ultimate delivery of the product.
A company will have its logistics management right when there are no time lags during the process, and the customers receive the final product or service in proper condition. Ultimately, this enables the organization in controlling its costs.