Supply Chain Management: Definition, Process Stages, and its aim in business

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Supply Chain Management: Definition, Process Stages, and its aim in business

Supply Chain Management Definition Process Stages and its aim in business

The main purpose of business actors establishes a company is to obtain profit profit. To achieve this goal, business people must be good at managing products by doing supply chain management.

In the business world, Supply Chain Management or SCM is a non-strange term sound. Especially if the business run is in manufacturing. The application of SCM is an obligation to the company.

For business people who have pioneered businesses, it is better if business people learn and understand more about supply chain management, so business people can take the right steps so that the efforts run more advanced.

Want to know more about Supply Chain Management? Here is a full explanation:

Definition Supply Chain Management

Supply Chain Management or Supply Chain Management is a very important part of a company. Good SCM indicates high and quality company competitiveness.

Supply Chain Management itself is defined as an activity that includes coordination, scheduling and control of the procurement, production, supply, or shipping of products or services to consumers.

Management and Control Supply Chain Management includes material or raw material, payment, information from suppliers to producers and from wholesalers to consumers. Supply chain management coverage also achieves daily administration, operations, and also logistics companies.

Supply chain management is a very complex, especially if applied to large companies. However, if this system is implemented well, the company can operate more effectively and efficiently.

In order for the supply chain process to run smoothly, then three components in the supply chain management must also take good. Three components of the supply chain management in question are:

  • UPStream Supply Chain Management is a process where the company gets supplies from outside the company in the form of raw materials to produce production.
  • Internal Supply Chain Management is the next stage where raw materials have been accepted and are processed and produced into materials.
  • Downstream Supply Chain Management is a process of distributing products that have become consumers through distributors.

Supply Chain Management Function

In a company, supply chain management has a very important function and role that relates to the operation of a company. The first supply chain management function is physical function in the form of changing raw materials into materials for consumer needs.

The supply chain management function is closely related to various kinds of physical costs such as the cost of purchasing raw materials, storage costs, transportation costs and so on.

Supply chain management also functions as a mediation of the market where connecting companies with distributors that distribute products.

Finally, Chain Supply Management serves to ensure and regulate financing related to market surveys, product planning, and other costs beyond physical financing.

Process of Chain Supply Management Stages

As well as supply chain management is a process involving many processes and various parties. A product or service can reach the hands of consumers after going through various stages in supply chain management. These stages include:

1. Customer

The first stage that started supply chain management comes from consumers. At this stage, the customer submits an order or order of a product offered by the manufacturer.

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When placing an order, Customer will provide information related to ordering products. This information includes the number of products ordered and the delivery date of the product ordered.

2. Planning.

After the order is received by the manufacturer, the team or the planning department will make planning regarding the production of the product requested. In addition to production planning, the planning team is also responsible for the preparation of the need for raw materials needed.

3. Purchasing.

The third stage in supply chain management is the purchase of raw materials. This was done by the Purchasing Department after receiving a production plan carried out by the Planning Department.

At this stage, the purchase department will contact the supplier to purchase raw materials and supporting materials. In addition to making a purchase, this department also determines the date of receipt of the material and the number of raw materials purchased.

4. Inventory.

If the order of raw materials has come, then the raw material will be sent to the factory for quality checks. If the quality of raw materials and the number has met the standard, the raw material will be stored in the warehouse. This stage is called inventory.

5. Production

When raw materials have been examined and stored, later the raw material will be processed with supporting materials into materials ordered by customers.

After being produced, raw materials that have become material will be stored again in the warehouse. Later the product will be sent to the customer.

6. Delivery

This stage is the last part of supply chain management. At this stage, the products stored in the warehouse will be sent to the customer according to the requested delivery date. The courier will ensure that the product has reached the customer’s hand perfectly.

Purpose of Utilization Chain Supply Management in Business

In order for the production process, until the distribution can run smoothly, the use of supply chain management is one of the conditions that must be carried out by business people. The use of supply chain management in business has several objectives, including:

1. Maintain cooperation in a series of network networks

Cooperation is the main key to the success of a company. Without good cooperation, the company’s body will occur chaos or chaos.

With the implementation of supply chain management, it is expected that coordination and cooperation in each company network will be better, so that the work or production is increasingly effective and efficient.

2. Maintain customer or customer satisfaction

A company will not be able to walk without customers. Therefore, customer satisfaction must be maintained or even improved. The correct supply chain management helps companies maintain customer satisfaction because the product can handle customers on timely and satisfactory quality.

3. Achieve cost efficiency throughout the system and stages

By implementing supply chain management it is expected that companies can use available funds more efficiently without being a waste due to purchasing unnecessary goods. Through the application of supply chain management it is also expected to be the process of transportation and distribution to be more effective and efficient.

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4. Win market competition

The application of SCM is also aimed at so that companies can win or maintain market competition. This can be done if the supply chain provides products that are cheap, quality and vary.

Supply Chain Management Strategy

Supply Chain Management is one of the competitiveness indicators of a company. Supply chain management built well indicates that the company’s competitiveness is also high. To build good supply chain management, there are two strategies that can be run.

The first strategy is to build relationships with suppliers of raw materials. Not only customers, suppliers are an important chain part of supply chain management. A good partner relationship can guarantee the success of other chains.

One way to build a good relationship with the supplier of raw materials is to not choose too many suppliers. Then, focus on suppliers who have many advantages, so companies don’t lose money.

Another strategy is to focus on improving customer service and customer satisfaction. Satisfaction is something that must be considered when dealing with customers. If the customer feels satisfied, then it is likely that the customer will re-order to the company.

Producing a lot of profit is the purpose of a standing company. However, to produce profits certainly cannot be done carelessly. Application of supply chain management is one way to increase profits.

Through supply chain management built well, the company can improve the image and competitiveness in other competitors. Not only that, through the supply chain management customer satisfaction is also guaranteed and ultimately make your business more profitable.

Also make sure you use a good system in managing supply chain management. This is to ensure that the availability of stocks, raw materials and other supporting materials according to market demand.

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