What exactly is a Supply Chain Management System?
Small-to-medium-sized businesses (SMBs) often struggle with many of the same supply chain management (SCM) issues big companies have: Labor challenges, supply shortages, weather and socio-economic disruptions, rising transportation costs, and inventory management are just a few.
And although supply chains have existed for ages, most companies have only recently paid attention to their operational value. SMBs still usually use paper-based Excel spreadsheets to manage their data and processes. For the most part, they don’t integrate their departments.
How 5 key supply chain management elements combine for better results
SCM includes all processes that transform raw materials into final products. SCM–and supply chain management systems (SCM systems)–are designed to streamline a business’s supply-side activities to maximize customer value and gain a competitive advantage by cutting excess costs and delivering products faster and more efficiently.
Good SCM results from the efforts of various supply chain partners:
- The planning process matches supply with customer and manufacturing demand, so firms can predict future needs and act accordingly. Planning factors in raw materials needed during each manufacturing stage, equipment capacity/limitations, and staffing needs.
- To produce products, companies work in advance to source raw materials from suppliers, ensuring raw materials meet manufacturing and production specifications and that prices paid are in line with market expectations.
- During the manufacturing process, a company transforms raw materials into products via machinery, labor, or other external forces, using sub-tasks like assembly, testing, inspection, and packaging.
- Companies rely on a distribution process–including backup or diversified distribution methods–to get products to customers.
- Lastly, companies address product support and customer returns (reverse logistics), ensuring they can receive returned products and correctly assign refunds.
Basic Supply Chain Models
Supply chains come in many different flavors:
- A more-traditional continuous flow model is often best for industries that rely on a manufacturer producing the same good over and over and consistent customer demand.
- The flexible agile model worksbest for companies with unpredictable demand or custom-order products.
- The fast model emphasizes quick product production/turnover to capitalize on a trend, so the product is entirely sold before the trend ends (think “fast fashion”).
- Companies impacted by seasonality or high peak-season demand use a flexible model that ensures production can quickly be ramped up or wound down.
- Companies with tight profit margins use the efficient model to optimize equipment/machinery, inventory management, and order processing.
- Some highly specialized industries with highly technical requirements use a custom model.
SCM and SCM systems help companies control manufacturing processes, improve product quality, reduce the risk of recalls and lawsuits, and build a strong consumer brand. At the same time, SCM enhances customer service by avoiding costly shortages or periods of inventory oversupply.
BrillDog provides a comprehensive supply chain management system for small-to-medium-sized businesses. The BrillDog SCM system improves efficiencies and brings value to the supply chain of SMBs. Contact BrillDog today.