Supply chain management (SCM) is the process of supply chain planning, organizing, and controlling the flow of goods and services from production to consumption. It encompasses all the activities involved in getting a product from the raw materials handling stage to the customer’s hands. A well-managed supply chain optimization enhances the functions of supply chain management system and can help businesses reduce costs, improve efficiency, and deliver products to customers faster and more reliably.
However, despite having such clear roles of what is SCM, there is often major confusion between supply chain management vs logistics management. To eliminate this confusion, today we are going to provide you with 5 functions of supply chain management system.
Supply Chain Management Functions
Importance of Supply Chain Management for Businesses
First things first, why is supply chain management important for businesses in the first place? Well, in today’s globalized economy, supply chains are becoming increasingly complex. Businesses are sourcing materials from all over the world, and they are selling their products to customers in multiple markets. This complexity can make it difficult to manage supply chains effectively. However, SCM functions can help businesses overcome these challenges and achieve their goals.
5 Functions of Supply Chain Management System
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Purchasing
Purchasing is the process of acquiring goods and services from suppliers. This involves activities such as sourcing, negotiating contracts, and supplier relationship management. Effective purchasing can help businesses to get the right products at the right price, from the right suppliers.
Purchasing is the first stage of the supply chain functions. It is responsible for sourcing and procuring the goods and services that a business needs to produce its products. Effective purchasing can help businesses save money, improve quality control, and reduce risk.
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Operations
Operations are the activities involved in transforming raw materials into finished products. This includes activities such as manufacturing, assembly, and packaging. Effective operations can help businesses to produce high-quality products efficiently and on time.
Operations are the “engine” of the supply chain. They are responsible for converting raw materials into finished products that can be sold to customers. Effective operations can help businesses to reduce costs, improve quality, and increase customer service and satisfaction.
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Logistics
Logistics is the process of moving goods and services from one place to another. This includes activities such as transportation management, warehousing, and distribution channels. Effective logistics can help businesses to get their products to customers quickly and efficiently.
Logistics is the “bridge” between operations and customers. It is responsible for getting products from the production planning plant to the customer’s hands. Effective logistics can help businesses to reduce costs, improve customer satisfaction, and gain a competitive advantage.
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Resource Management
Resource management is the process of planning, allocating, and using resources effectively. This includes activities such as inventory management, capacity planning, and workforce management. Effective resource management can help businesses to reduce costs, improve efficiency, and meet customer demand planning.
Resource management is the “glue” that holds the supply chain together. It is responsible for ensuring that businesses have the resources they need to produce and deliver products to customers. Effective resource management can help businesses to reduce costs, improve efficiency, and increase profitability.
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Information Workflow
Information workflow is the process of collecting, storing, and using information to manage the supply chain. This includes activities such as data management, reporting, and supply chain analytics. Effective information workflow can help businesses to make better decisions, improve efficiency, and reduce risk.
Information workflow is the “nervous system” of the supply chain. It is responsible for providing businesses with the information they need to make decisions. Effective information workflow can help businesses to improve efficiency, reduce costs, and gain a competitive advantage.
Conclusion
Supply chain management is a complex and critical function for businesses of all sizes. By understanding and effectively managing the five core supply chain management functions, businesses can achieve their goals, gain a competitive advantage, and collaborate well with their respective back office operations management company.