In this article, understand what the concept of SCM means and discover five ways to start using this resource in your business model.
It can also be referred to as supply chain management: the management and handling of the total flow carried out by a company or organization for producing its goods or services.
This concept is increasingly being used in the business environment because it's able to chart and create a network of all stages and members comprising the production process, from the acquisition of raw material to the final destination of the product or service itself.
If you do not know this term yet, or if you want to learn more about it, then this article is for you. We will show how Supply Chain Management works and how you can apply it to your business.
SCM analyzes and executes all the processes involved in a supply chain. In its concept, it is a set of activities which are targeted toward handling the products, services, information, and financial flow within the organization with its participants-be it internal or external, such as suppliers and customers.
SCM can be defined as the new paradigm in corporate management, the formation of strategic decisions regarding the company is based on its supply chain.
Unlike the traditional system, which only cared about the logistics of a business, SCM employs shared information and plans activities that range from the acquisition of the primary material to the final distribution of the product or service delivered by the company.
Since Supply Chain Management can integrate all components of the supply chain-from the procurement of the raw material right through to shipping to the end customer-it offers more chances to analyze each stage of the production process.
This will also enable the firms to monitor and motivate the development of the process in order to reduce their costs by increasing their profit margin, and sometimes accelerating their overall production process to enable them to schedule better delivery times with customers.
The better the supply chain is designed and managed, the greater the likelihood the business is to succeed in its activities and gaining new customers. For this to take place, one has to be aware of some concepts that should be applied to your business's supply chain. Look at the main one.
Connection : access data from each stage of the supply chain, in addition to making it available in a way that facilitates analysis. Management software and integration tools help in this process.
Collaboration : encourage collaboration from other parties involved in the process, especially suppliers, who stop being simple companies and become business partners.
Automation : Depending on the business model, a supply chain may require a variety of activities from company employees. Therefore, investing in automation can save the company time on manual and routine tasks and focus on what really matters.
Comprehensiveness : Data collected from the supply chain needs to be entered and shared in real time. This way, all parties involved can share information, adapt to unexpected changes, and collaborate to improve the process as a whole.
Regardless of the size of your business, implementing Supply Chain Management concepts can bring several benefits. To do this, some actions need to be taken. Check out the main ones that you can start implementing in your organization today.
Good inventory management is crucial, as it prevents the company from spending too much on purchasing materials that are not necessary or having to delay or even stop its activities due to a lack of materials and supplies.
Unused products stored in inventory end up generating costs, but operating with a small quantity of supplies can prevent your business from making a large sale or unexpected order from a customer. Therefore, it is necessary to have a balanced inventory, replenishing materials at the ideal time.
Having an established and reliable supplier network can accelerate your company's results. Have you noticed that your business needs a predetermined quantity of a material every month? Automate the purchase of these items with a reliable supplier. This way, you save time on budgets and making new purchases.
Additionally, make sure that your current suppliers are meeting your expectations and improving their performance. As mentioned earlier, a good supplier ends up becoming a partner in your business.
Reducing costs and expenses is always good, isn’t it? This is possible when applying SCM. By checking each step of your production chain, you will be able to identify opportunities for process improvements that can save you money when performing your activities.
Use key performance indicators (KPIs) to encourage all parties involved in the supply chain to successfully perform their activities. Through these indicators, you can also check which sectors are experiencing failures or worse results, allowing you to take the right actions to improve the process as a whole.
The distribution network encompasses everything from your sales strategy and prospecting for new customers to tracking deliveries. By achieving better performance in this area, you will have greater customer satisfaction, thus being able to further leverage the results of your business.
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