Importance Of Supply Chain Management

4 years ago

It is well known that supply chain management is an integral part of most businesses and is essential to company success and customer satisfaction. 

What Is Supply Chain Management?

Supply Chain Management consists of the steps involved in planning, procurement, warehousing, production, distribution, and sales promotion and fulfilment. It serves as the key link that connects the manufacturer to the consumer. A well planned supply chain and efficient customer service systems are particularly important for any retailer looking to provide a competitive advantage to its customers.

The Role Of Retailers

Retailers play a vital role in managing the supply chain process. They strive to remove costs and take control of the supply chain with the goal of improving customer service and meeting or exceeding customer expectations. A well run business’ supply chain will allow them to provide faster delivery to their customers, which makes products readily available for consumers to purchase on-line or in store.

The Idea Behind Supply Chain Management

The basic idea behind supply chain management is that companies will produce, distribute and subsequently sell a product in order to make a profit. The strategy behind a well run supply chain is to manage costs by sourcing products and outsourcing services with the goal of reducing expenses and increasing operating profitability.

Process Required For Managing The Supply Chain

The process of managing supply chain management typically includes a four step process from the time the product is manufactured to the time the customer purchases the product. An effective supply chain is able to manage and control “Value”, “Volume” and “Cost”. Value is increased in the supply chain programme by producing more efficiently and effectively in order to decrease costs. Volume in the supply chain is enhanced by reducing cycle times, improving inventory management and raising service levels. Cost is lowered in the supply chain by becoming more efficient, reducing cycle times, managing inventories, and outsourcing to other companies in the supply chain.

Once the process of managing each aspect of supply chain management is completed and the objectives for the supply chain have been achieved you are able to a streamline your supply chain management.

Focus On Value

Value in supply chain management is the ability to create a significant competitive edge. Value is increased in supply chain management by producing better quality products, with better performance features. More value in the supply chain is also added by using better quality materials, higher labour rates, and superior product design and delivery.

Focus On Volume

Volume is the ability to produce more products more quickly. This ability to speed the supply chain process allows companies to reduce lead times, increase production output and decrease inventory levels. Speed in the supply chain can be achieved by better supplier management systems, product design suited to manufacturing, and better quality production infrastructure.

Focus On Costs

In the supply chain, the focus is on cost in order to be more profitable. The goal is to reduce and ultimately, eliminate costs from the process. It is also important in supply chain management to measure, test and monitor costs.

Supplier Management

Supplier Management is a cost effective way to increase the efficiency of supply chain management. If you have a large and extensive business, you frequently outsource some of the supply chain management process to third party companies. Supplier management is also a useful strategy because it gives you more control of the quality, quantity, and lead time of the product and services being provided.

Sampling Of Departments

Below are a number of departments in a typical supply chain management process:


Purchasing is the internal departments in the supply chain responsible for managing procurement, order management, payments, receipts, stock-tracking and supplier relationships.


Warehousing is the function of storing and collecting inventory in appropriate locations until it is moved and delivered to customers. The main goal of warehousing is to protect the products from damage, theft, or contamination. Quality control, storage locations and inventory records are the responsibility of the warehousing departments.


Distribution is the process of transporting goods from the point of manufacture to the point of sale. There are a number of ways to move products, each of which have its advantages and disadvantages. Transportation methods include, air freight, road transport, rail and sea freight shipping. Supplier Management is also part of the distribution process.


Marketing is the business department responsible for promoting and identifying the products and services of a company. The main goal of marketing is to create a value added product for customers in order to increase sales and increase profit. Marketing is a critical department of the supply chain.


Manufacturing is the process of producing goods or services through the use of technology and labour. The goal of manufacturing is to create goods efficiently, produce a quality product and offer a high level of customer service. Manufacturing is a very important aspect of supply chain management.

Order Processing

Order Processing is an important area of supply chain management, which is responsible for entering orders in a database and dispatching goods efficiently. This department of a supply chain is much like a large warehouse. Order Processing is very important to a company in terms of internet sales and fulfilment services. Order processing is the main point of contact for customers between the time that the order was placed and time of delivery.

Customer Services

Customer Services is the department of a supply chain responsible for customer satisfaction. This is achieved by the smooth and efficient delivery of goods to customers. Customer Services is an area of supply chain management that is dependent on the rest of the supply chain. It has a great impact on how a company prices its products, as well as manages customer relations.

Information Technology

Information Technology is the department in a supply chain responsible for managing the systems used to provide information; these include managing the flow of data, information storage and retrieval. Information technology is an important part of supply chain management process because it ensures that data is organized and stored efficiently. This data is the primary source of information used to manage the supply chain process.

Supply Chain Management Studies

There are many Supply Chain Management studies available on the market. These studies are intended for students who are looking to learn about supply chain management from the ground up. Some of the Supply Chain Management studies offered are available online, while others are not. Many universities offer Supply Chain Management studies on post graduate and honours degree levels.

Most people don’t realize the role that Supply Chain Management plays in their lives until they experience some sort of problem with it. For example, think about how you would feel if you ordered a product and expected it to be delivered within a certain amount of time. Imagine you do not receive the product, or that it is delivered late? It is likely that your order was lost or misplaced along the supply chain and now you must be inconvenienced while it is retraced. If you happen to be a retailer yourself, then the impact of Supply Chain Management is even greater because you are dealing with other businesses that make up the supply chain.

Have you ever bought a product that you hated…and then saw the same item very similar for sale at a lower price? When that happens it is likely that the other company has decided to sell that particular product at a loss in order to get you to purchase it. By doing this business has succeeded in getting the competing product, which it did not wish to sell, off their shelves and onto the competition. This is good business practice, but it is also basic supply chain management, and you should be thankful to whoever is responsible for it!

There are many reasons why a company would want to adopt Supply Chain Management. The most common reason is to reduce costs involved in supply chain management. Many companies are on a quest to reduce inventory costs and many methods are used to this end.

Supply Chain Management makes all process efficient and thus, it so called Theory of Constraints is the core of ideal supply chain management. Case studies are known as the best way to learn management or anything related to management. Experience is king, you can’t get it anywhere else, but on the other hand you can still learn a lot from reading case studies.

Sometimes the structure of your company or organization is not good enough to allow to make efficient supply chain management. If you want to make your supplies constantly and effectively, your company should consist of different departments.

All suppliers in a supply chain are important, as they all work together to bring the desired products and services to the end users. This is also part of the supply chain management process. The suppliers in a supply chain are the core of any company and they all work together to keep the process efficient. There are many benefits of supply chain management. The most important ones include:

  • It enables companies to focus on their core competencies instead of organizing logistics and managing supply chain.
  • Unnecessary duplication of activities is avoided.
  • Costs are significantly reduced.
  • Efficiency is increased.
  • Higher levels of customer service are offered.
  • There is increased competitive advantage.
  • It helps to reduce the use of natural resources.

When creating an effective supply chain, it is important to always consider the cost. You should strive to keep costs low, especially when dealing with suppliers. A good supply chain management strategy will take into account your short-term and long-term costs. The most important thing to do is work with reliable suppliers and focus on building relationships. This will help to ensure a continuous process in the way that your supply chain runs.

Many companies have used the supply chain management process to become very successful. A good example of a company that has successfully reaped the benefits of supply chain management is Apple Computers. Their process has allowed them to create a very successful business. Some of the other benefits of supply chain management include better planning, lower costs and a higher quality of service.

Supply chain management can be a very rewarding career. If you are a good manager, with a strong business background, then you might just make a name for yourself in this field. It is important for you to be able to develop strong leadership skills however, because this is what makes you successful in this business.

Another benefit of successful supply chain management is that you can increase your brand visibility. You are able to reach your customers effectively in this kind of structure. When other business owners talk to each other about supply chain management, you can be sure that you will be talked about. The main thing to remember is to know how to take care of the suppliers. This is very important if you wish to succeed at supply chain management.

The Importance Of Supply Management

Although it is one of the most important part of public sector, the importance of supply management is not always acknowledged. The way public sector spends large amounts of money shows the importance of supply management. The importance of supply management is greatly highlighted in the way that public sector deals with procurement of equipments. In fact, if you see the way different departments of the government procure their equipments, it is clear that they are able to enjoy most of the benefits that supply management offers. This paper is an attempt to show the importance of supply management and how this knowledge can make the life easier for both government and corporations.

Supply Management is among the most critical divisions of any corporation. The reason is the importance of its role in helping organizations to maintain steady course in almost all of their supply chains. Supply management has become an indispensable element in the modern business world because of the roles it plays in streamlining the supply chain, increasing predictability, reducing demand and meeting customer expectations.

This is true especially in the government sector. This is because government performs a plethora of important business functions like education, health and security. Such agencies require massive financial aid from tax payers from time to time. To meet the demands of these agencies government departments are often forced to procure items that add to such expenses.

Supply chain management is a theoretical model that makes it possible to manage the supply chains of the firms efficiently. It brings the supplies and other aspects of the business together. In order to improve the flow of resources, it is important for the firm to bring together all the supplies into one stream. This process is referred to as purchasing or procurement. Procurement is a process of selecting or acquiring the supplies that a firm requires. It also involves price negotiation with suppliers. Procurement and flow of resources are the elements of supply chain management that ensure that the firm has the supplies that it requires.

According to Stone and Jenkins, supply chain management lies in the process of “getting your hands on the goods, bargaining for them, monitoring their flow, and making sure that you can fulfill your commitments to customers.” They further assert that the basis of supply chain management is in order to ensure that the supplies flow uninterrupted from the supplier to the customer. Typically this involves the firm making the best possible decisions on when and where to buy the supplies. It also involves the firm ensuring that the supplies are not diverted from the main course.

Using Supply Management

Procurement is a key element in the supply management process. It is the process of acquiring the items that the firm requires. When the process of procurement is effective the firm is able to acquire the items that it requires. In other words, the firm is able to acquire the products that the market demands hence contributing to its growth. On the other hand, if the procurement process is ineffective it increases the cost of the items to be acquired hence affect the growth of the firm negatively. It is thus important to note that procurement is a crucial factor in a process. In order to ensure good procurement process it’s necessary to key into the different stages of supply management.

The supply management cycle lies in 7 different stages. They include forecasting, order release, shipping and order confirmations, billing, product receipts, usage and supply chain management. This cycle of seven stages helps to ensure that the supply is ample and in predictable manner hence the efficient management of the supplies.

The first of these stages is the forecasting. This is where the company decides the products it intends to sell. Its main aim is to match the market demand. In order to be successful in forecasting the company is supposed to analyze the market thoroughly and make appropriate projections based on their analysis. This process consists of the conversion of the sales leads into purchase orders. This process involves the selection of the items to be purchased and the specification of the items. This stage also involves deciding the appropriate delivery times and deciding if the items should be returned or not.

The second stage is the order release. This is where the company releases the purchase orders to the supplier. This is a very important stage of the process because the quality of the products to be obtained depends a lot on this stage. In the event that the product is not bought or canceled, the company has to purchase the item once again hence spending more money.

The third stage is shipping and order confirmations. The company has to ensure that the item has been received by the supplier and shipped. This requires that there is a bridge between the producer and the customer in order to ensure that both sides understand the transaction. Thus the company should check that the item has been shipped to them before completion of the transactions.

The fourth stage involves billing. This is the stage where the company collects the payment from their customers. In the event that the payment is late, the development of the customer can be hindered by this. The company should ensure that the invoice is issued and the payment received in good time.

The fifth stage is the receipt stage. This is the stage where the company confirms, checks and asseses the product for the quality before its used. It also involves the testing of the product. At the end of this stage the company is supposed to be able to confirm the “rightness” of the product.

The sixth stage is the usage. This is the stage where the company uses the products received. Through this stage the company can be able to monitor the products and identify when repairs are needed. It also helps to decide whether the supplier needs to be replaced.

The seventh and final stage is the supply chain management where the company ensures that the products flow from the suppliers to the customers without any hitch.

Sometimes there are problems that may arise out of the cycle. In case of such problems the firm should examine them carefully in order to rectify the problems. To do this it may require the altering of certain stages.

Supply Management Cycle In The Government.

The government needs to take inventory of the items in its public supply chain. The items may include foodstuff, drugs, medical equipment, books, furniture, and many others. Its aim of this procedure is to analyze the trend of the items. The government also has to divide these items into three broad categories. They include non-controlled items, controlled items and items with special government process. The government has the responsibility of creating an electronic identification number for each of the items that they provide. The number should be based on the national reference number management code. This code is used in identifying the items.

The government has to organize inventory control of the items like companies do. they can use the same system to regulate the supply. This ensures that the public services are sustained. This is made possible by the use of technology. The government can use control inventories to manage the flow of products. In this way, the government can track the items and identify those that have not been received. The government can use standard reports to facilitate inventory management. This system helps to check that all the boxes are delivered without fail. They can also track the date of replenishment. This helps in identifying the date of expiration of the items. In the event that this date has been forgotten, it can prevent unnecessary movements of the items. This also minimizes inventory.

Technology plays an important role in the management of the inventory. For instance they use computerized systems to carry out the task of data management and data extraction. The government can make use of computerized system to keep track of the items in the inventory. They can use these systems to put the items into the inventory and track the supply. The government can also use information such as the quantity and cost of the items that they have so that they can manage the flow of the items. This assists in reducing cost and errors in the inventory.

The government has to use a single source document for accounting purposes. This is to ensure that there is no loss of records and that it leads to efficient management of the items. Any manual mismanagement of the records will subject the government to the hassles of keeping fake records and also create a wrong perception of the importance of the items in the inventory. The government can conduct an analysis of the items in the inventory by studying the data that they collect from the supply of goods. They can then use this data to establish the trend of the supply. This information is used as a basic resource in buying the items.

Supply Management Cycle In Healthcare.

In the healthcare it is necessary to work with different products. These products can range from emergency supplies and medicines down to surgical pins and hospital equipment. The cycle should be the same. First, it should involve the analysis of the market which will help in identifying the needs of the healthcare system. This will then be followed by the creation of the products and the manufacturing of the products. After which the products should be shipped to the hospitals. Then follows the sale of the products. The sale is usually done to the patients who need them. The cycle ends when the patient is cured.

The cycle begins by understanding the market demand for the hospital services that the company has provided. There are different segments that each patient may be categorized in. The hospital has to identify the requirements of the patients for each product in order to ensure that the products are manufactured and sold to the right people. It is important that the products that are released to the market should be cost effective and of good quality. Failure to do this will encourage the people to change hospitals.

The next stage is the creation of the product. The firm should keep in mind the quantity of the products it intends to sell to the hospitals. This will assist the firm in determining the number of units that it will need to make and maintain. The firm can also change the products over the time in order to ensure that the products compensate for the changes in the trend of the market.

After the creation, the product should be shipped to the hospitals. The hospital should be in a position to have a permanent flow of the products. This will be achieved if the firm ships the goods to all the major hospitals. This increases accessibility and reduces cost. This will also enable the company to produce and deliver products in a bid to match the demand. The company should also maintain a back stock of the products to match the demand of the market. This is to ensure that there are enough products to maintain the flow of the company to the market.

In the last stage, the company sells the product to the organizations that will be using it. The company has to consult with the hospitals and ensure that the hospitals are aware of the type and quantity of the products that will be delivered to the hospital.

Supply chain strategy is a plan to manage the distributors, suppliers, and the suppliers in order to get a good flow of products. It is the merger of the supply management cycle with supply chain management strategies. The goals of supply chain management strategy are to reduce cost, to improve flexibility, and to improve the quality of products. Supply chain management strategy also provides the company with a way of monitoring the flow of products. This is a tool that is used in making sure that there is a smooth supply. Supply chain management strategies is a tool that is used in ensuring that there is a smooth coordination of the company and the company. This helps in reducing the cost of production.


With the use of technology it is possible to simplify and speed up the management of the inventory of the products in the healthcare sector. The government can use different software to carry out the manual work. This software can help to increase efficiency and reduce the time that the workers use to manage the inventory.

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