Global markets are expanding beyond borders and re-defining the way demand and supplies are managed. Global companies are driven by markets across continents. To keep the cost of manufacturing down, they are forced to keep looking to set up production centers where the cost of raw materials and labor is cheap. Sourcing of raw materials and vendors to supply the right quality, quantity and at right price calls for dynamic procurement strategy spanning across countries.
With the above scenario you find companies procuring materials globally from various vendors to supply raw materials to their factories situated in different continents. The finished goods out of these different factory locations then pass through various chains of distribution network involving warehouses, exports to different countries or local markets, distributors, retailers and finally to the end customer.
In simple language, managing all activities in tandem to manage demand and supply on a global scale is Supply Chain Management. As per definition SCM is the management of a network of all business processes and activities involving procurement of raw materials, manufacturing and distribution management of Finished Goods. SCM is also called the art of management of providing the Right Product, At the Right Time, Right Place and at the Right Cost to the Customer.
Three aspects of supply chain management:
Planning: Interpreting a strategic management of resources in meeting customer demands for a service or product. In other words: what you hope to achieve with your supply chain.
Evaluation: Gaining better visibility into the different parts of the supply chain and determining areas in need of improvement – to allow for better performance, higher efficiency, and reduced waste.
Monitoring: Watching for discrepancies within the function of the supply chain to mitigate errors and ensure that consumers receive the right services or products according to the right schedule.
Why SCM strategy is important for an Organization?
SCM are the critical backbone to Business Organizations today. Effective Market coverage, Availability of Products at locations that hold the key to revenue recognition depends upon the effectiveness of Supply Chain management rolled out. Very simply stated, when a product is introduced in the market and advertised, the entire market in the country and all the sales counters need to have the product where the customer can buy and take delivery. Any glitch in the product not being available at the right time can result in the drop-in customer interest and demand which can be disastrous. Transportation network design and management assume importance to support sales and marketing management.