The Importance of Supply Chain Management

Supply chain management is a process that is used to ensure that products are available when and where they are needed. This process includes everything from purchasing to manufacturing, transportation, and inventory management. It begins with listening to the market to develop a product’s specifications and then proceeds through each of the steps of the supply chain. These steps must be closely coordinated to ensure that products and services are consistently available to customers.

Supply chain management is comprised of five primary elements: planning, sourcing raw materials, manufacturing, delivery, and returns. The planning phase is the foundation of the process, and the other elements specialize in specific requirements for executing that plan. To be successful, a company must develop expertise in each of these five elements.

Supply chain efficiencies are vital for customer satisfaction. By coordinating the flow of raw materials, production, trade, and order management, a company is able to create products that satisfy customer demands. This improves customer satisfaction and loyalty, while reducing costs and increasing efficiency. It is important for a company to see its supply chain from the perspective of its customers.

Increasingly, consumers are aware of the impact that their purchases have on the environment. Many non-governmental organizations and consumers are pushing companies to switch to more sustainable practices. Some of these strategies include organic foods, anti-sweatshop labor codes, and buying locally-produced goods. Other methods include adopting a green supply chain strategy. This can help a company to reduce its carbon footprint.

A recent example of a supply chain failure was the COVID-19 pandemic, which affected the global supply chain. This outbreak affected global maritime shipping and temporarily grounded operations. It was an example of the importance of evaluating how supply chains operate, and evaluating their risks. Taking steps to ensure they are functioning properly is crucial for any company.

Typically, in the supply chain, suppliers provide individual parts to the next link in the chain. For example, the components of an iPad are provided by a variety of suppliers, including Samsung and LG who manufacture the processor chips. Other suppliers produce the touchscreen display and flash memory. When these parts are combined together, the manufacturer will assemble the device.