The Concept of Supply Chain Management in Business Management: Introduction, Definition and Benefits
Supply chain management is an important concept in business management. It deals with the flow of goods as well as services, the movement and the flow of raw materials, the management of inventory and the movement of the finished products from the starting point of manufacturing to the end.The concept of the supply chain has been defined in many ways. Here are some more accepted and beefier definitions.
- The supply chain is the more efficient management of the upstream as well as downstream flows of the raw materials, products and services among the customers, suppliers, business partners, resellers and the company.
- Supply chain management is more customers oriented when the different elements of the supply chain work together for the overall satisfaction of the customer. Costs must be lowered in the chain so more value and efficiency can be added.
The modern economy has become more networked in the globally digitalized economy. The organizations now realize that they need to rely on the supply chains. The supply chain is based on the concept of business relationships. In these days, these are the main relationships that are known to extend beyond the traditional boundaries of the enterprises.
Some of the most well-known organizations that have been known to incorporate the supply chains in their business include Dell and Hewlett Packard (HP). These companies are known to have collaborative supply chains in which the business partners are to accomplish certain strategic activities. This inter-organizational supply chain based network is more referred to as the new form of organization.
The changes in the business in the the21st century are the main reasons for the evolution and implementation of the supply chain networks. Based on the growth of globalization, there has been an increase in the number of multinational companies.
There are uncountable benefits of the supply chain for the modern organizations.One of the main benefits is that it helps in lowering the overall costs. The suppliers are approached that can provide the raw material at the right rates and the right times. Secondly, the supply chain management system helps in achieving a more effective collaboration. When the supply chain management is integrated with the modern software systems, it helps in positioning the raw materials and the finished products timely. Cycle times are an important part of the supply chain management. It is the time taken by the business to convert the raw material to the final product and to send it to the customer. With the slower cycle time, the organization is called slow and the response of the customers to the products slows down. With the help of an efficient supply chain management system, the cycle times are improved. There can be conflicts between the suppliers and the supply chain managers; these can be dealt with the help of an effective supply chain management system. The efficient supply chain management has an efficient production spectrum that helps in dealing with the conflicts.