In business, supply chain management, also called supply chain management, involves the movement and storage of goods and services, from locations and companies, through the supply chain and to their ultimate destinations. The ultimate destination is valued for both the resources and labor that are required to produce and deliver the products. Many activities in supply chain management are included in supply chain planning; for example, identifying potential bottlenecks in the supply chain, analyzing customer needs and preferences, developing and maintaining smooth communication links between various companies and locations, monitoring and evaluating inventory levels, analyzing the transportation of goods and materials and developing and implementing strategies for leveraging existing supply networks and relationships. The ultimate goal of supply chain management is to ensure that the supply chain is efficient and that the resources are effectively deployed. An efficient supply chain facilitates the achievement of business objectives by reducing delivery time and cost and increasing customer satisfaction.
Supply chain management requires a comprehensive assessment of all of an organizations' activities, involving both its internal operations as well as those of its suppliers. A thorough analysis of an organization's supply chain will identify the key drivers of growth and the sources of supply of the raw materials and components that are vital for completing the tasks involved in production. Analysis of the supply chain will determine where the supply of demand is coming from, and supply chain management efforts should be directed toward developing a plan to address supply chain issues that may arise as the company grows and develops. A company's analysis of its supply chain will determine if the company is meeting its objectives or if it is losing opportunities that could have been readily foreseen.
The globalization of markets has made it necessary for companies throughout the world to utilize a flexible supply chain management approach. Companies must be able to respond to rapidly changing global markets and to develop new strategies for meeting increasingly complex supply requirements. The introduction of state of the art computer programs by major corporations has made it possible for companies to easily maintain their global market share. However, the introduction of computer programs and automated systems have also increased the speed and extent with which end customers are moved across international borders and the number of foreign suppliers that are available for end users.
An effective supply chain management system is necessary if a manufacturer wishes to remain a competitive manufacturer in a globalizing economy. In order for a manufacturer to successfully compete, it is necessary to have a worldwide market. However, many manufacturers have tried and failed at achieving consistent levels of production in a timely fashion. This results in products that are lacking in both quality and consistency with respect to the specific needs of the consumer when the product becomes ready to be sold.
Manufacturers that fail to meet consumer demands run the risk of losing large amounts of money to their competitors. Companies that do not have a plan for meeting demand often run into supply chain management problems because they are attempting to meet too much demand without having a plan to fill the need. It is important to note that demand planning is not related to supply chain management; however, the two concepts often go hand in hand.
Supply chain management focuses on all elements that lead up to the manufacturing of a product. These include such elements as the creation of the product, the development of its components and parts, transportation of these components and parts to their designated destination, and the processing of these components. There are multiple business processes within the supply chain management process. These include such elements as logistics, distribution, sales, returns, customer service, financial operations, and other aspects of a company's business. It is often believed that these aspects are layered upon each other, but they are actually one and the same.
Many companies fail to realize the importance of quality control in the supply chain management process. Most manufacturing process relies on standardized, repeatable processes in order to create a successful product. The creation of a new product is nearly impossible unless it is mass produced. In order for a company to mass produce a new product, it must first develop or find a manufacturer to partner with. Once the company has found a manufacturer or partners have been acquired, it then needs to work with the manufacturer in developing the new product and process necessary to bring it to market.
Although there are many components to supply chain management, it is imperative that all parties involved (manufacturer, distributor, sales, etc.) work together to provide the best possible product to their customers. If one party is missing key steps in the manufacturing process, then the entire business process is bound to suffer. All parties involved in the production, distribution, sales, or customer service of any product must work together to provide quality products and meet customer demand.
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