What is supply chain management?
Supply chain management is a commonly used term in the logistics and manufacturing sector. Not yet everyone knows exactly what supply chain management means. Do you also not know exactly what supply chain management means, and would you like to get a better understanding? After reading this article you will know more about the meaning of supply chain (management), what it means exactly and why it is so important. This way you will know exactly what to expect!
The meaning of supply chain management
Supply chain management is a broad term which comprehend many aspects. With the term Supply Chain Management we mean the design, planning, execution, management and control of all activities in relation to goods and services. From acquiring raw materials to a possible return shipment from an end-consumer.
The supply chain is basically one big logistic network of channels and connections. In the supply chain there are various different stakeholders consisting manufacturers, processors, transport companies and retailers. This network makes sure that goods and products are being delivered to consumers all across the globe. All stakeholders have one common purpose, namely to create a net value for consumers in a cost efficient way.
With supply chain management the balance between supply & demand is also taken into account as well the construction and use of a competitive infrastructure. The many chains in this network all intertwine, however they are all crucial for the functioning of the supply chain as a whole.
The supply chain reaches from input to end product, in which a distinction is made between external and internal parts of the supply chain. We will explain the difference between them a little further.
The external supply chain
With the external supply chain we mean all activities that takes place outside the organization; Collaborations with other chain partners. In the external supply chain it is important to deal flexibly with changes that can occur in all kinds of areas, such as market conditions, expectations from customers or customer or other environmental factors. In the external supply chain, innovation and responsiveness are very important. In addition, corporate social responsibility is also becoming increasingly important in this area of supply chain management.
The internal supply chain
The internal supply chain is less complicated than the external supply chain. It is limited to its own organization. Parts of the internal supply chain purchase, storage and production. Often the internal supply chain has a huge influence on the success of the business. When the internal supply chain is planned correctly, operational processes can be carried out effectively. This way an efficient workflow can be established within the organization.
Why supply chain management?
When you get started with supply chain management, you want to achieve an optimal chain in which everything is connected. Because everything is connected, you will ensure that real-time information exchange is possible between all chains in the supply chain. The insights that come from this real-time information exchange are very valuable for organizations. As an organization you ensure that you can respond to situations a lot better through extra knowledge and agility. This allows you to deliver faster and more flexibly and will most likely reduce inventory costs. Supply chain management makes it a lot easier for entrepreneurs to do business sustainably and leaves more room for innovations.
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