Supply chain management entails the oversight of information, money, and materials in a business network. This commerce concept is preoccupied with all the interconnected entities that are integral in the availing of products and services to the customer. It entails coordinating all the activities involved in the production of goods and services. Also, it is from the acquisition of raw materials, their transfiguration into valuable merchandises, transportation, and availing it to the end user (Stadtler, 2015). The objectives of this process are primarily to reduce the expenses in addition to augmenting customer service. These goals are realized by decreasing the total investment expended in the inventory in the whole process besides guaranteeing high-quality offerings reach the customers. Supply chain management allows the efficient flow of offerings, information, and finances.
SCM is instrumental in the creation of business networks and maintaining an organization’s growth and success in the marketplace. In so doing, companies cease viewing each other as competitors whereby there is not seeking of a winner or loser, but instead, they choose to cooperate to bring about mutually beneficial results. Therefore, each of these entities gets to acknowledge the value of partnering with others with this value being transferred to the customer (Li, Ragu-Nathan, T. Ragu-Nathan, & Rao, 2006). It will entail the movement of materials through the production process. The business network that an organization possesses is the manifestation of the different links with other firms that enable the efficient flow of materials and information between them. Consequently, the flow of materials involves the movement of goods from their raw state to the complete one that is sold to the customer. The movement of information entails the consumers demand to the interconnected entities in the network.
Each supply chain is deemed to undergo a particular lifecycle in the capitalizing of a new opportunity or product whereby each step is critical to the subsequent one. The first step is the identification of an opportunity. Once a need has been identified in the market, a business may decide to satisfy it. If it proves to have a positive growth potential, then a company can choose to avail the offering to the marketplace (Li et al., 2006). The second step involves selecting business partners. After the identification of how a company can satisfy a particular need, it will need to create a business network that will contain all the strategic partners it will need to deliver the finished product to consumers effectively. These partners will need to have different advantages that they bring to the table such as transportation, consulting, warehousing, and logistics.
Thirdly, the supply chain is formed. Establishing this business network ensures that the partnership has dealt with any barriers that could bar them from entering the market and making profits besides providing value for their clients (Li et al., 2006). The various links that are formed will facilitate an effective flow of information and materials. Fourthly, the operation of a supply chain begins. Supply chain management will help in this aspect by coordinating the different activities. All the functions that SCM is tasked with must be performed well for the success of this supply chain. Lastly, it may need to undergo reconfiguration. To avoid extinction, a supply chain is often reconfigured whereby centers are reduced, centralized, or relocated. A new distribution system could also be introduced besides the supplier base being decreased. In so doing, the success and continuity of the business network are guaranteed.
The functional process of the SCM comprises different tasks. The first responsibility is that of defining boundaries and links. Management must define the roles that are to be played by each stakeholder in the operational activities of the supply chain (Stadtler, 2015). Secondly, it must engage in the balancing of the current demand with the capacity that the supply chain has. The business network will thus become proactive with regards to expected demand besides becoming reactive in the case of unanticipated demand. Another role is that of logistics, which entails moving, storing, transporting, and any other means of handling materials (Stadtler, 2015). Additionally, SCM must ensure an efficient flow of the manufacturing process besides ensuring that it is done at the least time and cost. An additional task is that of selling, which entails creating awareness about the different offerings and encouraging the consumer base to make purchases.
Integration of any supply chain requires the use of a mutual information system to manage the business network. One solution to this aspect is to share production software whereby other partners can view the number of materials that are needed at a particular moment. In so doing, every entity can meet the current demand. Another solution would be to integrate vertically, which would entail owing the supply chain. It would guarantee a dedicated supply of materials (Stadtler, 2015). Additionally, it is known that each business uses a unique system thereby the need for a common platform with which to interact. Since these partners must be in constant communication, having an electronic data exchange is instrumental (Stadtler, 2015). Thus, the electronic integration of all users eases this process. It is very useful since the alternative would be to receive information manually and having to feed it in the different systems, which would waste time besides being vulnerable to human error.
Moreover, SCM is very crucial in coordinating all the operations that are necessary for the production process from the sourcing of materials to the sale of the finished offering to the consumer base. Therefore, it is very beneficial with one advantage being the improvement of the business network by facilitating efficient tracking and coordination of all processes. Secondly, it ensures that there are minimal delays thereby stabilizing the relationships, which avoids the risk of losing business besides guaranteeing optimal customer satisfaction (Stadtler, 2015). However, there are some challenges that SCM faces such as globalization, which increases the cost in the chain. Others include changing consumer preferences and the goal of increasing market share. Furthermore, some trends that are being seen in SCM include going digital, being more flexible to change, and enhanced collaboration.
In conclusion, it is clear that supply chain management enables the efficient flow of offerings, information, and finances. It is significant in the making of business networks and maintaining an organization’s growth and success in the marketplace. Also, each supply chain must undergo a lifecycle which entails different phases from its inception to its reconfiguration. The functional process of this management comprises various tasks that are targeted at better coordination and availing value for the customer. Additionally, some integrated solutions allow for better management of the business network such as sharing production software or integrating vertically. The electronic data exchange is also very useful in ensuring better flow of information. Furthermore, there are some benefits and challenges associated with this aspect. Some of the trends in this sector include going digital, being more flexible to change, and enhanced collaboration.