How to know what material is needed? How much and where is it required? What percentage of the installed capacity is being used? Supply chain management is the tool to solve these and other doubts.
To learn more about supply chain management, let's start by defining what the supply chain is:
Supply chain: Includes all activities related to the flow and transformation of goods and products, from the raw material stage to consumption by the end user, from the supplier of raw materials to the retailer's shelf
Supply Chain Management
It is a relatively novel managerial process that had great momentum in the past decade and generates significant cost reductions, allowing companies a higher level of competitiveness and higher profits.
In the new millennium, competition occurs between supply chains and not between individual companies. Supply chain management revolves around the efficient integration of suppliers, manufacturers, distributors, and retailers, in this way it is possible to substantially reduce costs and at the same time improve customer service levels.
Supply chain management covers the following areas: logistics network, warehousing, inventory management, purchasing, strategic alliances, IT and telecommunications as key elements in communications and decision-making.
Companies that want to be successful need to streamline their processes in all areas
Causes of the development of supply chain management
Five factors have been identified as the triggers to put supply chain management at the center of business attention:
- The rapid development of information flows, also known as the information revolution, supported by new technologies. The emergence of electronic commerce, both between companies and between companies and end consumers. Empowerment of customers due to new technologies. and the large number of companies that produce for him. The client has become more demanding in terms of product quality, delivery times, comfort, service, etc. The great mobility of capital driven by the internationalization of the economy and the deregulation of capital flows. establish new relationships between competing companies translated into the achievement of alliances that make processes more efficient,both in purchasing or delivery management and other key processes and high cost generators
What is novel?
One may wonder, but what is new about supply chain management if companies have always had to deal with managing their distribution, transportation, delivery and customer service processes?
What is new about the concept is that it integrates these processes with the objectives and the corporate strategy, which previously was handled in isolation by the purchasing department or by the distribution department, now merges into the same system that allows to take advantage of synergies in favor of decreases in costs and greater efficiency in front of the clients.
Previously, it was common for purchasing and production departments to function without or with very little communication with each other, now with comprehensive management they cannot operate in the same way since waste, whether from raw materials (in the purchasing part) or of times (in production) result in inefficiencies that decrease levels of competitiveness.
Today, production can let you know, in real time, what you need and what you don't need in production, and sellers can quickly and accurately communicate to production the references and quantities of the products sold and the period of time to complete, etc. It is about making the flow of information work in tandem with the flow of transformation in companies.
To achieve these efficiencies, technologies such as MRP, ERP and CRM have been developed, which allow companies to transform their archaic production and information flows into oiled machinery capable of integrating key processes: supply management, material management and the demand.
The benefits
Among the main benefits generated by the integral management of the supply chain can be mentioned:
- Customer loyalty: By achieving higher levels of efficiency in production processes, it is possible to improve customer service in terms of price, delivery time, purchase conditions, etc., which is reflected in the customer's behavior towards the company and their products and improving the positioning in their minds, thus achieving greater capacity to retain customers. It should be understood that customers, although they have obtained greater power in recent years due to new technologies and that they can choose among a large number of companies producing for them, have a tendency to non-mobility if they find what they are looking for because this mobility represents them. costs, either in economic terms or in terms of time and wear. Entering new markets: It is only possible to face international competition if you have the capacity to do so, if you have competitive prices and processes. This competition not only occurs when companies interfere in export processes but when new international entrants enter the domestic markets. Market leadership: Once the loyalty of the clients has been obtained and having the ability to attract new ones, it will be possible to think about leading the market, after all, it is the client that defines the leaders. New commercial and competitive relationships: The trend is towards competition and alliances, in order to decrease costs and generate larger market sizes.
What to focus on to succeed
The company that intends to really improve its efficiency levels based on supply chain management must focus its strategies on customer awareness, cost reduction and operational excellence. When the firm is able to understand its client and the processes required to satisfy it, it will surely be able to successfully reach it.
It can be concluded then that supply chain management is a macro business process that involves all the functions in the company and that it must focus on the end customer to be successful.
