Supply Chain Management Systems
Tri State Industrial Alliance has been helping businesses cut costs and boost profits by implementing supply chain management systems for decades. Learn more about how a SCM system can improve your business.
Distribution is the process of making a product or service available for the consumer or business user who needs it.
Supply Chain Management Systems
For years, supply chain management systems have helped businesses across the globe cut their costs, boost profits, and increase the overall health of their organization. For those who are looking for a way to gain an advantage that is easy to implement, supply chain planning and strategies are a great way to accomplish that. On this page we break down how businesses can integrate SCM (supply chain management) systems into their operations and grow their profits.
What are Supply Chain Management (SCM) Systems?
Supply Chain Management (SCM) Systems can be defined as the systematic approach to the flow of products/services from raw materials, to manufacture, through storage, and shipment/delivery to the end consumer. Everything from the procurement of materials through to purchase is considered part of the supply chain management process; a SCM system is nothing more than a strategic plan to ensure quality and prompt delivery of a product/service, reduce waste, and boost profits.
Supply chain management (SCM) systems involve both local and global supply chain processes, and in today's landscape, most organizations use digital supply chain management systems and SCM software. Software makes it easier for organizations to track and manage operations and logistics associated with fulfillment and information tracking.
Where Do Supply Chain Management Systems Come From?
The supply chain is nothing new. You can credit the supply chain being formed to whenever the first product or service sold took place. Humans have been using cash as currency for over 40,000 years. Scientists have successfully tracked exchange and trade through archaeological records, dating as far back as the Upper Paleolithic era when hunters traded weapons and other tools. People would barter and make deals for desirable objects, and money would come in a bit later. (The Conversation: When & Why Did People First Start Using Money)
However, as society progressed into an industrialized civilization, supply chain management systems became much more sophisticated. Companies could now specialize in departmental labor to produce more efficient and effective production of goods and services. Arguably SCM systems had their biggest revolution when Henry Ford standardized the production line.
How do Supply Chain Management Systems Work?
Industrial Supply Chain Management
Supply Chain Management Systems (SCM) are build around the idea that every product or service on the market is a result of the efforts of multiple organizations that make up the supply chain management process. Supply chain management has been around for a long-time, yet only recently are companies viewing their supply chain management strategy as an opportunity for growth.
There are typically 5 parts of SCM:
Each of these steps represents aa touchpoint of the supply chain management process that a product/service goes through to reach the customer.
The goal of supply chain management is to keep costs down by eliminating inefficiencies, improve quality, and productivity. Since there are many moving pieces in a supply chain, there are many opportunities to decrease expenses or add value with professional SCM.
By optimizing your industrial supply chain management strategy, you can see a direct impact on the bottom line.
Why is Supply Chain Planning and SCM Systems Important?
Supply chain management systems and supply chain planning is important because it gives an organization the opportunity to increase their profits without expanding their product/service line. SCM is dually important because without management systems in place, costs can get out of control and a company will lose profits.
Besides cost efficiency from a company standpoint, supply chain management has a direct impact on the consumer as well. Supply chain management systems can help improve relationships in terms of customer service; when done professionally, SCM systems ensure the products are delivered at the right location, at the right time. When you increase customer satisfaction, your business is able to build on and increase the loyalty of your customers. Supply chain management systems also help reduce the cost of purchasing, and overall production costs. Supply chain management systems help lower costs—which strengthens the position of a company in the marketplace.
Following best practices and implementing a supply chain management system also mitigates the use of fixed assets; i.e. warehouses, fleets, etc. When you enable supply chain consultants and experts to revamp the supply chain, you retain customer service while simultaneously reducing your expenditures. For example, using 4 fleet vehicles instead of 6, or using 5 warehouse/distribution centers instead of 7. This increases efficiency and boosts savings. (Ultimately profit.)
However, supply chain management systems plan a large role in our society. SCM systems can improve the overall quality of life in a society. By reducing waste, we can sustain life and avoid climate extremes; supply chains also are critical for delivering every day necessities such as food, water, and medicine. Supply chain planning and management systems also ensures buildings have the energy necessary for HVAC, and refrigeration.
When you combine both the enterprise perspective with that of the consumer, supply chain management systems improve the quality of life for everyone; creating jobs, boosting economic growth, and increasing the standard of living. Professional supply chain management companies like Tri State Industrial Alliance help businesses with their supply chain management processes, which includes manufacturing, warehousing, distribution, and logistic operations. This strengthens the country's supply chain infrastructure, which allows us to exchange goods at a lower cost, allowing consumers to buy more products and drive economic growth.
One of the biggest changes to supply chain management is the integration of technology. The integration of technology has enabled industrial supply chain management to become much more efficient, which is highly critical because the industrial supply chain includes manufacturing, which has higher costs associated to reach the end result.
These higher costs are due to various vendors carrying out separate, specific functions. Each vendor has their own fixed and variable costs.The manipulation, transportation, and storage of a product lead to increased operating costs, putting increased importance on efficiency of a supply chain process.
What are the benefits of Supply Chain Management Systems?
Supply Chain Management Systems produce goods more efficiently, with higher profits and at lower costs. SCM also helps increase collaboration across an organization. A SCM system will enable a business to better manage demand cycles, properly manage inventory, and keep costs at a minimum. These supply chain management system benefits are accomplished by the right supply chain management planning, SCM strategies, and by using the right supply chain management software to manage today's complex environment.