For those of you whose business is engaged in manufacturing , retail or wholesale, of course you are no stranger to the term SCM, namely Supply Chain Management.
That’s because, in an effort to meet consumer needs you will really need SCM. It can be said that SCM is one of the keys to the success of your business.
In different businesses, of course, there are also differences in the supply chain. This can be influenced by the scale of the company being supplied and the supplier.
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We will discuss further about what SCM is, its goals, and its components. Not to be left behind, we will also provide tips on how to optimize SCM.
Definition of Supply Chain Management
Supply Chain Management is defined as a series of activities required in planning, controlling and distributing products.
The process includes purchasing product raw materials, production activities and also product distribution to customers. Everything is done in the most effective and efficient way. Both in terms of time, effort, especially cost.
Because SCM is a complex and broad field of business, strong support is needed to operate it. Both from business strategy, as well as the role of technology to be able to maximize its function and role for partners. Starting from manufacturers, suppliers as well as companies.
With this support, it will be easier to realize what is the goal of SCM.
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Purpose of Supply Chain Management (SCM)
The main objective of Supply Chain Management (SCM) is to manage and coordinate supply and demand in an effective way.
The hope is that in this way it will be easier to overcome any obstacles that exist in the Supply Chain Management process . Some of the obstacles that often arise include:
- Good relationship management with clients or partners
- Procurement problems and also supplier management
- Identification of problems as well as risks, as well as solutions
Overcoming every obstacle effectively and efficiently does not necessarily make the SCM business safe from competition. You still have to think about a business strategy in order to survive in the midst of competition.
Call it such as product variety, availability and timely delivery, as well as competitive prices but quality goods. Do not forget to always maintain good relations with suppliers.
Also make sure you focus on the availability of goods so that the supply chain runs smoothly. Using an inventory app can ensure you don’t miss out on the flow of inventory.
Some of these points can be used as a supply chain management strategy to survive in this business and continue to grow.
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Components in Supply Chain Management
The concept of Supply Chain Management covers a very broad scope. Therefore a little complex to understand in a short time.
In order to make it easier for you to understand it, the important thing to know is the components in it. Where these components act as processes or stages of the SCM itself. Starting from the preparation of production, until the product reaches the consumer.
The Supply Chain Management component includes the following:
1. Planning Process
The first component is the planning process. This process involves analysis of customer demand, budget plans, manpower and also transportation. Analysis of consumer or customer demand needs to be done, so that there are no shortages or excess production.
The seller knows the type of product and the amount needed so that consumer demand can be fulfilled. In this case, sales and inventory reports can be used as a basis or reference for demand analysis.
This stage or process plays an important role, because it can minimize errors during the production period until the product is distributed to customers.
2. Procurement
The second process or component is related to procurement. Where in this process, you have to ensure the quality of the goods, the price is also the best, the quantity is as needed.
To be able to make all of that happen, you usually have to go through several stages in the procurement process, including:
- Submit a purchase order
- Assessment of purchase applications
- Approval of the proposed purchase
- Ordering goods from suppliers
With a slightly lengthy process, you can ensure that the goods you provide are the best in terms of price and quality.
3. Production Process
Next is the production stage, which converts raw materials into finished goods. Both by human labor and machine power.
The production process should not be stopped in the middle of the road. Because it will result in a lack of inventory and also delays in delivery.
If that’s the case, you will definitely disappoint customers. This can already be a point of weakness from your business in the eyes of future customers.
4. Warehouse Management
After the production process, finished goods or products that are ready to be marketed must be stored in a storage room or warehouse.
Be sure to always record the entry and exit of goods in the warehouse carefully, thoroughly, neatly and regularly so that a warehouse application is needed for this process.
This is to ensure that there are no discrepancies or discrepancies between the physical stock and the data in the warehouse books.
Warehouse management itself consists of several activities starting to enter goods, issue, take and pack, cross docking and stock taking.
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5. Shipping or Distribution
After the goods are taken from the warehouse and packed, they are ready to be sent. Make sure when the goods are packed, the courier or delivery department and the fleet are ready.
That way the delivery can be hastened and not disappoint customers.
6. Return of Goods
The last component in Supply Chain Management is the return of goods or returns. You must be prepared for the possible risk of complaints from customers, to return of goods or returns, as well as requests for money back or refunds.
Make sure to always be responsive to customer complaints. Service like this will really help customers and not give a bad impression even if something is disappointing.
Generally, returns and refunds occur due to damage to the goods, inappropriate goods or various other complaints about your product. So, providing a positive response and service that is also fast, will help the various complaints about your product to be forgiven a little.
Supply Chain Management Strategy
The SCM system has certain strategies to be maximally successful. The reason for this strategy is that the supply chain process runs smoothly and is organized. The following are strategies that you can use for supply chain management, including:
- Knowing the internal condition of the company.
- Have cooperation with many suppliers.
- Develop partnerships.
- Focus on customers.
The supply chain management strategy is very important so that good cooperation is established between companies and suppliers. In addition, a good relationship will lead to overcoming various customer requests and complaints .
This supply chain management will be more visible in its application to businesses that produce finished goods. It can be food, drink or crafts. Make sure you apply this to your business. Of course to expedite business operational management .
But before that, make sure you really understand the purpose and components of this SCM. That way it will make it easier for you to make decisions and business operations can continue to run effectively and efficiently.
This is an explanation of what Supply Chain Management (SCM) is. Starting from the definition, goals, strategic tips for SCM businesses, to the components that cover the process.
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From the entire explanation above, the conclusion is that Supply Chain Management is a complex business with a broad scope.
It’s no wonder that it involves a lot of processes or activities to ensure smooth running from the start of the production period until the product reaches the customer’s hands. To optimize it in a more effective way, you can take advantage of advanced technologies.
Now many have provided supply chain software. An example is the online inventory application from Mekari. With this technology, you can minimize errors as well as bottlenecks in the supply chain process.