The success or failure of any business depends on how managers handle the daily activities. It is important that each manager knows the importance of producing quality goods or services in a timely manner to meet the need of their customers. It is also important that the goods or services produced are cost efficient. During this entire process, a company interacts and work with other companies such as suppliers, dealers, retailers, etc from production until the finished goods reached the consumers. In line of this, came the concept of Supply Chain Management.

What is It?

Supply chain management is the management of group of companies involved in the ultimate production of goods and services needed by consumers. It is also the integration of art and science with the ways of how the company operates. It is not only simple incorporation but it is the constant gathering of information starting from finding the best raw materials for production or services until getting informational feedback on customer satisfaction of the company’s product.

Its Components

There are five basic components:

First, is planning or the tactical part. This is managing all resources which will be use in the making of a product that meet the demand of the customers. Factors to be considered in planning is to manage a supply chain that offers less cost, efficient and provides high quality to customers.

Second, is sourcing. Supply managers must choose suppliers who can deliver goods and services needed to create their product in a timely manner. Therefore, a system of good pricing, deliver and payment process must be developed to improve relationship between the company and its suppliers.

The third component is the making or the manufacturing step. This is the most intensive portion since it requires schedule of necessary activities like production, testing, packaging and preparation of the product for delivery.

Delivery is the fourth component of supply chain management. This refers to the coordination to customers regarding orders, developing a system of storage houses, carriers for delivery and setting up an invoicing system.

Fifth component is the return. This is creating a network in which the purpose is solely to address customers problems regarding the products delivered to them such as defective and excess products.

Author is a management consultant and helps find various business houses best Supply Chain consultants for them. He writes a lot about supply chain management and owns the website http://supplychainsuccess.com/

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