• January 09, 2020
  • 4

What is supply chain

Supply chain management is the handling of the entire production flow of a good or service — starting from the raw components all the way to delivering the final product to the consumer. To accomplish this task, a company will create a network of suppliers (the "links" in the chain) that move the product along from the suppliers of raw materials to the organizations who deal directly with users.

Supply chain management is an expansive and complex undertaking that relies on each partner -- from suppliers to manufacturers and beyond -- to run well. Because of this, effective supply chain management also requires change management, collaboration and risk management to create alignment and communication between all the participants.

In SCM, the supply chain manager coordinates the logistics of all aspects of the supply chain which consists of five parts:

The plan or strategy
The source (of raw materials or services)
Manufacturing (focused on productivity and efficiency)
Delivery and logistics
The return system (for defective or unwanted products)
The supply chain manager tries to minimize shortages and keep costs down. The job is not only about logistics and purchasing inventory. According to Salary.com, supply chain managers, "make recommendations to improve productivity, quality, and efficiency of operations."

Improvements in productivity and efficiency go straight to the bottom line of a company and have a real and lasting impact. Good supply chain management keeps companies out of the headlines and away from expensive recalls and lawsuits.

SCM can also improve quality of life by fostering job creation, providing a foundation for economic growth and improving standards of living. It provides a multitude of job opportunities, since supply chain professionals design and control all of the supply chains in a society as well as manage inventory control, warehousing, packaging and logistics. Furthermore, a common feature of most poor nations is their lack of developed supply chains. Societies with strong, developed supply chain infrastructures -- such as large railroad networks, interstate highway systems and an array of airports and seaports -- can efficiently exchange goods at lower costs, allowing consumers to buy more products, thus providing economic growth and increasing the standard of living.