June 30, 2016

What Is Supply Chain Management And Why Is It Important?

You have probably heard the term numerous times, but you may have wondered what is supply chain management. To many people, the term supply chain management sounds like technical jargon that could only be meaningful to those working in certain industries, but in reality, supply chain management is something that affects almost everyone in the world. When goods are purchased, many people visualize the complete transaction as one that occurs exclusively between the purchaser and the supplier of the products. In this thinking, the purchaser of a product pays for it, and the supplier or manufacturer delivers the product to the consumer. While this is ultimately an accurate description, it is over simplified to a high degree. The reality is that there are many steps involved in delivering a product to a consumer, and there are numerous organizations involved in making this happen successfully. If you have wondered what is supply chain management and why is it important, it is crucial to understand the various components necessary when it comes to supplying consumers with the products they have purchased.

Supply chain management can be thought of simply as the combination of two basic ideas. First is the idea that every product that eventually ends up in the hands of a customer has reached its destination as a result of the cumulative efforts of a large number of companies and organizations. This array of businesses and organizations can be referred to as the supply chain. Second is the idea that many organizations have historically only paid attention to what was happening within their businesses, never giving thought to the other vital components of the chain. This type of thinking leads to miscommunications and delays, and it can leave consumers feeling like they have not been treated well. As a result, the comprehensive management of supply chains has become a necessity so that products are delivered in a manner that is satisfactory to consumers, as well as all of the organizations involved in particular supply chain.

Obviously, consumers are the people who would seem to benefit the most from comprehensive supply chain management. Even though they are technically a part of the chain, consumers are the components that are dependent upon a chain being managed efficiently. When their goods reach them in a timely manner without incident, they are happy and content knowing that things have worked in the way they are supposed to. They are also the components who have the least to do with how a supply chain is operated. Because of this, the burden of supply chain management often falls with suppliers or logistics companies.

Implementing the comprehensive management of a supply chain is no easy task, but once it has been put into place, every person and organization within the chain benefits greatly. Gone are the days when companies could be successful by simply minding their own business and concentrating their efforts on themselves. These days are different, and companies must ensure that each link in a supply chain is as strong as the one preceding it. When effective supply chain management has been implemented, profits increase, efficiency improves and customers are made happier and more likely to deal with a particular company in the future.