SCM is a process for planning, implementing and controlling all operations in a supply chain in order to meet all customer demands most efficiently. SCM takes place during a process of transporting and storing materials and check on-going works and finished products from manufacturing to consumption.
Adding more management levels or increasing the level of each component in a supply chain can increase the possibility to unite business processes. Components in a supply chain management include:
- Planning and monitoring
- Work structure
- Company organization
- Equipment structure (product line)
- Equipment structure (information line)
- Management approaches
- Management and rights structure
- Risk and reward structure
- Culture and behavior
Benefits from using SCM
- Enhancing productivity of all product lines by mutual collaborations among suppliers
- Improving customer services and minimizing stocks
- Reducing warehouse storage fee
- Reducing product unit price and maximizing benefits
- Reducing unnecessary costs
- Improving corporate competivitity
- Establishing a supply chain among traditional partners
- Promptly adapting to market changes and reducing negative effects on customers
Risks from using SCM
- Choosing an inappropriate SCM system might consequently affect all operations of a company, from production materials to distribution channels.
- An SCM incompatible to other operational management tools such as accounting system and business softwares might ruin a business.
- Other business models with many branches, partners and representative offices might lead to unanalyzable disorders.
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