What is Supply Chain Management?
Supply Chain Management (SCM) is the handling of the flow of goods and services from raw manufacturing through to its consumption by consumers. This process requires an organisation to have a network of suppliers that serve as links in the chain to move the product through several stages.
The World Logistics Passport provides supply chain management expertise that can be applied to your business to enhance trading operations. Designed to streamline the coordination of delivering goods from A to B, successful supply chain planning simplifies the trading processes from start to finish.
Why is SCM important?
Effective SCM improves the financial position of an organisation by delivering value linked to the organisation's corporate strategy. A successful supply chain strategy is critical to reducing operating costs from procurement activities, operations and logistics, and the whole supply chain. While the scale of profitability for large organisations is relative to managing their supply chain, the benefits of supply chain planning remain.
SCM also has a lesser societal role – ensuring that the necessities people depend on, like food, energy, medicine, and modern infrastructure, are flowing and available. Our Partner, Viracopos Airport (Brazil) has written a blog post on this in relation to COVID-19 here.
What are the 6 components of SCM?
- Supply Chain Planning
- Supply Chain Sourcing
- Warehouse & Transportation:
- Return of Goods:
While there is a distinction between the two, logistics and supply chain management often go hand in hand. Supply chains are responsible for the overall sourcing, processing, and delivery of goods to the end customer, while logistics focuses explicitly on moving and storing goods between different supply chain organisations.
SCM sets the strategy and directs daily logistical activities that happen in factories, warehouses, local shipping centres, and other facilities. Logistics is an aspect of the supply chain that stores or delivers finished goods or services to the customer, whether that's a manufacturer, distributor or consumer.
Supply Chain Management vs Operations Management (OM)
The biggest difference between SCM and OM is that supply chain management is mainly concerned with what happens outside of a company – obtaining materials and delivering products – while OM is concerned with what happens inside the company.
This means that a supply chain manager will spend their time negotiating contracts and evaluating suppliers, whereas the operations manager will often be planning and overseeing daily operations and processes. Supply chain planning services tend to be the same across industries; however, OP roles and responsibilities can vary widely depending on the product or service the business produces.
How does SCM reduce costs?
There are several cost-effective benefits of supply chain management, the most obvious one being the freeing up of finances to be allocated where they are needed. Looking at how to reduce these costs encourages supply chain managers to take a holistic view of their chain, which provides the opportunity to identify methods of saving money by making their process more efficient.
An example of this could be looking at the diversity of a supply chain. By thoroughly investigating its supplier network and identifying alternative providers, a supply chain manager could easily detect further benefits to their company, such as: new business, efficiency, and improving their organisation's corporate image.
Why would a supply chain manager outsource to another company?
Making the decision to outsource your SCM to a professional service provider can help to drive better results and free up time for an organisation to focus their efforts elsewhere. External providers often have exceptional supply chain expertise due to prolonged exposure and experience in the industry, allowing you to make the most out of your time and resources.
Key benefits of outsourcing supply chain management can enable an organisation to:
- Cut costs
- Develop strategic plans
- Improve logistics
- Expand your reach
- Add more flexibility
The WLP provides extensive expertise across a variety of subject matter, all to improve the flow of goods, streamline services, and enhance connectivity across the globe. Read more about who we are and what we do to support trade growth.