Supply Chain Management (SCM) is considered the backbone of almost every manufacturing and wholesale business. For example, handling packaging like lipstick boxes and many other ones quite effectively is crucial in the cosmetics business. But it is not just about handling the packages and maintaining inventory. It is a vast term that has various elements in it. If you want to know about new levels of SCM, then we can help you. We are here to give you a brief introduction to SCM and show its unique levels. We will also tell you what’s needs to consider for a good SCM.
Overview of Supply Chain Management (SCM)
Understanding SCM is relatively easy. But it is not a tiny part of the business that is a big misconception of many firms dealing with high inventories. Various elements are dependent on this thing. It can affect every other department of the company if taken for granted. That is the reason why many brands take this one quite seriously. Generally, it refers to the flow of goods or services from start to end that involves handling inventory, transportation, and many more. It can reduce the cost if it is efficient. But if there is a blockage in the supply chain, then businesses can suffer a lot. That shows how significant it is for firms of all sizes. So various elements are there that can affect this system.
It is the basic and the first level of SCM. It begins with the top-level and long-term decision-making of the firm. That means it involves planning everything that is needed for a successful and smooth running of operations. It consists of decision making which lays the foundation of every further step. This level also involves the decision about the product type that the business is going to sell. Not just this, it also involves surveys, analyzing market trends, taking customer feedback for improving the product or the service, etc. Businesses address some issues at this level. For example, selecting the location of the business facility and the purpose for choosing it is handled. Ensuring a reliable network of suppliers, logistic partners, etc., and innovative ideas to improve the operations are also done at this level. It can help in all the other groups greatly. Let us see how planning works.
The main thing in this process is planning. It is done on a different basis. It starts with the long-term plans that are then divided into shorter and shorter plans. Next, yearly or quarterly plans are devised. Then comes the master plan of working every month to achieve annual goals. Some businesses also prefer to have weekly and daily schedules to ensure smooth running later on. If this stage is done appropriately, then we can move to the next step.
When we are talking about SCM, it is the level that has great significance. Here short-term decision-making is done by the management. It includes short-term goals and how to achieve them. It continues the strategic stage, but the management is more specific about the functions and how they complete here. Here, manufacturing processes are also define for the firm that can ensure high standard production of the products at a minimum cost.
The center of focus is to achieve customer satisfaction at the end and delivering great value. But it would help if you did all of this at an economical cost. That means it is the step where firms control their expenditure. Due to this thing, this step has great importance among the companies. Some other decisions are also, like transportation, facility, inventory logistics, etc. All of these things consider analyzing the opportunities and costs.
Finally, it is the most basic level among all the others in Supply Chain Management (SCM). It is linked with the day-to-day operations of every company. Many processes and functions are included in this stage. It is also the encountered stage of SCM. Many companies do not consider the steps above while they are on this one. But this one is crucial for the brands in many ways. The operational manager has to make day-to-day decisions for the problems that might be unique as well. So, the framework does not change, and decisions about an individual issue are under strategic and tactical stages. Planning daily is essential. A decision about transportation, procurement, and supply of raw materials for production and many more things consider in this stage.
What makes A successful Supply Chain Management
Many factors and elements can indicate a successful SCM. But you need to ensure that all the steps follow carefully. If an error occurs at any level, it can cause damage. So, there should be some KPIs that can help us in understanding what a great SCM is. Integrating the internal supply chain with the planning or the buffers you already planned is a good indicator. It involves aligning the performance and smooth communication of information to all departments. Then comes the collaboration or integration of outside or extended supply chain networks. Real-time monitoring and keeping a track record of everything is essential. When all the KPI’s indicate that everything is working as planned, that means it is an excellent success of Supply Chain Management in the firm.
Many companies pay proper attention to their supply chain. But many brands think of it as logistics and managing the inventory of their lipstick boxes or other packages. It is not the complete truth. Many more functions and levels involve in this matter. These were the most important ones that covered the whole process.