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3 min read
In today’s competitive business landscape, efficient supply chain management (SCM) is essential for staying ahead. From sourcing raw materials to delivering finished goods, SCM connects every stage of production and distribution.
This blog will guide you through the definitions of supply chain management, and the tasks, objectives, and components you’ll need to do it well. Read on to uncover how advances in technology, combined with a robust enterprise resource planning (ERP) solution, can improve your supply chain management capabilities.
What is Supply Chain Management?
Supply chain management encompasses a wide range of activities, including production, demand forecasting, procurement, supplier relationships, inventory control, warehousing and logistics.
It involves the movement of materials and products from suppliers through manufacturing to end customers, as well as handling returns. What's more, it requires monitoring industry trends to anticipate future needs and challenges. Organisation is key for a successful supply chain, and it will help you to scale up production.
The integral parts within manufacturing and retail that will impact your business success:
Financial management: As you speed up the product flow to your customers, you speed up your cash flow into the business. Visibility into your supply chain can highlight where costs and wait times can be reduced, and profit margins increased. Moreover, if you can get your product to the customer quicker, you can also invoice them sooner.
Operating costs: The supply chain must be timed precisely to support the demand level for the product to avoid overstocking and inventory costs. It's also important to manage supply costs, such as raw materials and transportation.
Customer service: A well-orchestrated supply chain means your customer gets the order exactly when they need it, on time, every time. It involves the movement of materials and products from suppliers through manufacturing to end customers, as well as handling returns and after care support.
What are the components of supply chain management?
Planning: thinking strategically and planning. Where you will set up your premises? will you make your product domestically or internationally? Additional questions will form part of this stage, usually around how and when you'll produce, and where you will store your product.
Sourcing: procuring your raw materials and any components you intend to outsource. Price and delivery scheduling is also critical and vetting your suppliers thoroughly to ensure all contracts are negotiated to get the best value for optimal SCM.
Location: for successful supply chain management, you need to ensure that your location is suitable and convenient to your resources and materials.
Making: how will you assemble, test and pack your product? Do you have rules set for performance measurement, how you will store your data and ensure regulatory compliance.
Delivery: you need to consider every step of your logistics. Processing customer orders, distributing and transporting, as well as warehousing and inventory.
Returns: a streamlined customer return process is essential. Consider how you will handle returns of defective or discontinued products. What is the process for evaluating the product condition? And how will you authorise a return, schedule a replacement product and / or provide a refund.
How can technology influence your supply chain management?
Robust enterprise resource planning (ERP) solutions often include embedded supply chain management capabilities.
Major innovations in technology are also helping businesses to plan, forecast, and manage inventory alongside financial information related to the supply chain.
Examples of this technology include:
- Internet of Things (IoT): how we interact with technology is advancing all the time, and this allows for real-time communication by enhancing visibility, improving efficiency, and enabling real-time tracking of goods and inventory.
- Big data and advanced analytics: huge availability of data from product development, production and testing, down to the way you manufacture goods for improved innovation and decision-making.
- Robotics and automation: 'smart factories' and robots are already used extensively to streamline tasks. However, the integrations of these technologies will help overcome modern challenges as they take over ownership of manufacturing and delivering goods to customers.
- Simulations, 3D printing and augmented reality: 3D printing, when combined with cloud-based services and mobile apps, augmented reality and wearable technology, can all give workers critical information while leaving their hands free to perform their jobs.
CPiO has over 35 years of proven ERP experience, supporting manufacturing customers to configure their systems. Contact our team today to find out more about how our ERP solutions can help manage your entire supply chain, from procurement to warehousing, sales and customer services.
Explore our Sage for wholesale and distribution options with advice on how you can streamline your warehouse operations and ERP solutions that include; Sage X3, Sage 200 and Sage Intacct.
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