Core Elements of SCM

SCM consists of a wide range of activities that are needed to be taken care of. Understanding the supply chain and making necessary changes in each of them are equally important in meeting customer demands at an efficient cost.

In general, SCM takes care of the production, shipping, and delivery of products or services. Each step in this supply chain goes in series, i.e. the outcome of one stage is the input of the next stage. The core elements that are involved in SCM are as follows –

1. Planning

With the number of events, materials, time, and effort involved in business, it is very important to have clear planning in the supply chain. A well-designed plan should be made by customer needs, company values, and the image of the enterprise which is likely to be projected.

Planning involves estimating the workforce, cost of materials and equipment within a specified time. It is necessary to have a robust plan and eliminate the bullwhip effect. Nowadays, most business entities use ERP systems for supply chain analytics and material management.

2. Sourcing

The term ‘Sourcing’ in SCM refers to gathering and making agreements with vendors who can supply the required materials on demand. It is important to choose the vendors based on quality, quantity, cost, and availability.

Effective sourcing will result in quality control, effective resource utilization, and on-demand supply. Sourcing includes ordering, gathering, managing inventory, and authorizing invoices. Collaboration in the supply chain system begins from here.

3. Manufacturing

After planning the structure and collecting the raw materials, the next step is to coordinate manufacturing. This process is the core of any production business. It involves converting raw materials into finished goods with the help of labor, machinery, and technological tools.

For effective manufacturing, various factors should be considered such as scheduling, assembly, production, testing, and packaging. This helps in the reduction of waste and recycling/ reuse of by-products. Management in manufacturing will uphold standards and provide the required profits.

4. Logistics Management

After creating the product, the next part is to place the product in the hands of the customer/end-user and this is known as logistics management and inventory control. As customer interaction with a company begins with secure and on-time delivery, a company must build a robust delivery system.

Delivery planning will consist of various parts, such as taking the order, managing delivery focal points, scheduling delivery, collecting payment, and handling invoices. As e-commerce is largely associated with these activities, it is in the hands of the company to decide whether to take their help or plan for their delivery.

5. Return Management

Customer satisfaction revolves around the company’s efficiency in responsive customer care and well-defined return policy. Also, there exists a relationship between brand image, promotions, and inventory management with return management.

Return Management consists of three major components, i.e. Reverse Logistics, Customer Experience, and Asset Recovery. These activities can result in defect detection, understanding customer behavior and thereby improving business performance.

Every product or service we use goes through a wide range of operations before it gets into our hands. This is a complete process of Supply Chain Management that allows the complete flow of goods failing to which might affect the groundwork involved in this chain of events may result in an unsatisfactory customer/end-user experience.

Being said that there goes a lot of effort and task management from gathering the raw materials to delivering the end product for business sustainability. Supply Chain Management deals with control and coordination of such chain of events to improve efficiency and meet end-user demands.

In this article, we are going to look at What is Supply Chain Management, the various models of SCM, and much more