What is Supply Chain Management

people at the table

In the second decade of the 21st century, it is impossible to find job niches that are not riddled with terms in English. There are many that are superficial or are simply a translation that does not come from the appearance of a new concept. However, when we talk about supply chain management, we do refer to a distinctive concept that encompasses other activities in addition to logistics.

Differences between logistics and supply chain management

The easiest way to understand the difference between the two is to visualize logistics as one of the parts that make up supply chain management -or supply chain management-. Logistics is responsible for ensuring that the products are delivered under the conditions agreed with the client (quantity, price, time, place and price).

Supply chain management, from its more comprehensive logistics perspective, goes from the planning and design of the product until it is consumed (or returned to the chain through reverse logistics). Currently, the strategic aspect that the supply chain has for companies is increasingly accentuated.

Among those attributions that are outside of logistics is product design -which we have already mentioned-, the supply of raw materials or other products -according to quantity, price and time-, it can also help in planning how to get to the market – distribution channels, route to market-, management of own facilities and production systems, etc.

A very delicate point that crosses many of the functions of supply chain management is inventory management. Everything that happens in the supply chain can affect our ability to have the desired stock at the point of sale at all times. And poor stock management leads to cost overruns due to warehouse expenses, loss of sales due to stock breaks, waste of merchandise due to being expired or outdated, etc.

Benefits of good supply chain management

In order to improve stock management, it is necessary to optimize demand prediction, through which we can know which products and how much of each of them we need to produce and deliver to their destinations.
In the same way, this boost in stock management and demand forecasting will help us to be a more flexible company when it comes to responding to new demands and new customer behaviors, which are increasingly changing.
Stronger structure and relationships. The vision of supply chain management from a strategic and global point of view implies a closer relationship with suppliers and with the rest of the agents involved. It will also be a more demanding relationship, but bringing it to fruition will make us have more efficient and solid ties with them.
Detection of bottlenecks. By considering the whole process from one extreme to the other, we will also be better able to discover the conflicting points and, therefore, to solve them. Is our problem in demand forecasting or in stock management? Are we delayed in the production of the product or in its arrival at the stores?

Fine-tuning the entire supply chain requires a lot of effort, but all the advantages it brings give us a clear explanation of why the supply chain manager profile -or supply chain manager– is increasingly in demand in the world of work.

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