Supply chain management has been described as covering all aspects in the development of a product or service and is concerned with how to make this as cost effective as possible. What this means in practice is easier to understand by means of a real life example. Imagine there is a business that creates and sells footballs; supply chain management will be concerned with all aspects of the process from the storage of the materials to making the balls to sending them off to customers – if the business hopes to be as successful as they can they will want this all to occur in the most cost effective way.
A Closer Look at Supply Chain Management
For the sake of convenience it is usual to break down supply chain management (SCM) into five distinct stages; planning, developing, making, delivering and returning.
Planning
Planning is a vital element of effective supply chain management because if this is not done correctly it will cause problems elsewhere in the chain. The aim of the plan will be to come up with a product or service and decide on the best course of action to make this and get it to the customers who will want to buy it. Of course a vital part of planning will be deciding on a product or service that people will want to buy.
Developing
Developing is the next part of the supply chain management process and this involves taking steps to put the plans into action. If we were return to the example of our footballs; during the developing stage the company might seek out the best companies to provider materials and to arrange the means to get the final product to the customer. All the steps that need to make the plan a reality will occur during the developing stage.
Making
As the name might suggest this is the part of the operation where the product or service is actually being made. The business owners will need to ensure that this is occurring in the most effective way possible.
Delivering
This is another vital step because there is no point in creating goods and services if the customer is unable to get their hands on them.
Returning
All businesses will need to offer good customer service if they hope to be successful and part of this will be managing returned items. Rather than viewing these returned items as a loss they can actually be part of the learning process that will help make the whole supply chain more effective.
The Last Word on Supply Chain Management
Any company that wants to be effective will need to pay a lot of attention to supply chain management. This is not an intellectual exercise but instead a technique that a business has to keep on improving their business process. SCM is not something that is done once and then forgotten about but instead is an ongoing process. There are many factors that can change and the supply chain will be expected to change in response to this.
