Examining the Essentials of Supply Chain Management to Save Money

Sarah Lifestyle

Life seems to be getting more and more expensive with the passage of time and the effects of inflation suggest that the average household income isn’t quite keeping up with the pace of this rise in living costs. One of the best ways to fight back is to reduce the cost of your existing expenses by always seeking to find the best deal and the best way to do that in-turn is to gain a better understanding of supply chain management. This way you can identify some specific nodes of the supply chain to target and perhaps get better deals from.

Supply chain management (SCM) is the management of processes and networks that are involved in the flow of goods from their origin to the point at which they get consumed. The aim of SCM is essentially to create a centralised control of the production, shipment, and distribution of goods and services. Businesses that deploy SCM can cut down the costs involved in the supply-chain and also deliver products to consumers faster.

Overview of the Supply Chain Management

Effective SCM is built on a foundation of a selection of integrated processes. According to the Global Supply Chain Forum, there are eight processes involved in the supply chain management, including:

  • Customer relationship management: the process which provides the structure of the development and management of customer relationships. The management identifies an individual or a group of customers to provide with targeted products and services.
  • Supplier relationship management: represents the interaction between the business and its suppliers. The aim is to develop a system that connects the supplier with the firm to formulate good relations and cultivate favourable trading agreements.
  • Customer service management: has its core functionality at the customer interface to establish critical points of contact with the customer. Additionally, it provides customers with real-time information on orders, shipping dates, etc.
  • Demand management: creates a balance between demand and the supply chain management. A good demand management system should synchronise the supply and demand so as to increase flexibility and reduce variability.
  • Order fulfilment: includes the activities involved in identifying customer requirements. It also involves designing processes that aid in the meeting of customers’ needs while minimising cost.
  • Manufacturing flow management: includes activities involved in the control of the manufacturing flexibility in the supply chain. Flexibility in manufacturing is the ability to produce a wide variety of goods at an appropriate rate and minimal cost.
  • Product development and commercialisation: provides the structure for collaboration with customers and suppliers in the development of products, and brings them to the market. If appropriately implemented, the management can track the flow of new products across the supply chain.
  • Return management: manages return products and reverse logistics within the supply chain. If correctly implemented, the management can identify areas of improvement to reduce return requests. This can include ensuring the products and services meet user-friendliness and quality levels.

In conclusion, the supply chain management enables businesses to improve efficiencies, raise profits, and lower costs, but from the point of view of the consumer if you have a basic understanding of this then you’re the one who can save big on the costs of all the consumer products and services you buy.