Supply chain is a more general phrase that refers to the connection between suppliers and the final consumer. While moving, storing, and transferring goods, services, and information both inside and outside of the business are all considered to be part of logistics.
Logistics and supply chain management : Why so Important?
The action of moving goods around a supply chain is essentially what logistics management, a subset of supply chain management, is all about. It can be seen as one step in the process of developing a product and ensuring that it reaches its final consumer.
Logistics and supply chain relationship
In order to create a high-performance business model that fosters competitive advantage, supply chain management links key business operations both within and between different firms.
The operational framework within which logistics is carried out is established by supply chain management activities, which are viewed in the textbook as strategic decisions.
What is supply chain management (SCM)?
Supply chain management is the effort to create and manage the supply chain as effectively and efficiently as possible. and offering a sustainable competitive advantage and maximizing customer value.
6 Functions of Supply Chain Management
All business activities required to create and deliver goods and services must be coordinated by supply chain management. The management of the full flow of products and services is included.
1-Acquiring products
A buyer (your company) places an order with a supplier, or a client orders a finished good from your company, initiating the first task in logistics operations. The steps involved in processing an order include confirming product availability, setting the price, and establishing delivery terms. In this first function, it is important to note any shortages or other sorts of variation.
2-Inventory management
maintaining a low carrying cost while keeping adequate inventory on hand to meet demand. The biggest potential for high costs, which would have a detrimental effect on overall profitability, is generally associated with this function. To meet demand while keeping the expense of doing so as low as feasible, a balance must be struck.
3-Warehousing
The storage of commodities until they are sold is a part of logistics. It is a crucial decision point in logistics, and your choice of warehousing frequently affects how effectively your networks perform. Location, warehouse size, layout, and number are all decisions.
4-Packaging
The distribution of goods depends on logistical packing. It addresses damage prevention, material handling, and storage space requirements to guarantee that goods are delivered to clients effectively and to a high standard. The goods must be delivered to the customer promptly and without causing any harm or flaws to them.
5-Transportation
Since it transports items from the supplier to the buyer and from the buyer to the customer, transportation is frequently viewed as the most fundamental element of logistics. Once an order is placed, the transaction isn’t complete until the customer receives the items physically, which can only be done using a variety of transportation methods. Businesses typically base their transportation decisions on price, urgency, and infrastructure.
6-Customer services
Making sure customers receive excellent customer service is the final aspect of managing logistics. Making sure products are supplied to customers conveniently and effectively is the main aim of optimizing the smooth flow of your incoming and outbound networks. The 7 “rights" that all logisticians aspire to achieve are based on receiving products at the proper time and cost.
Some important KPIs in supply chain management
The fill rate
Calculates the proportion of orders that are delivered promptly and in full.
Number of orders
The number of items that are dispatched promptly is expressed as a percentage of the on-time delivery rate.
Inventory turns
How often the replenishment occurs and the speed at which items travel up and down the supply chain.
Cost per unit
The cost per unit of production quantifies the expense incurred in producing a single unit of a good or service.
Customer satisfaction
A metric used to gauge how happy customers are with the goods or services they receive.
Digital Supply Chain Definition and Benefits
Supply chains are being digitally transformed to make them into a smart system that can swiftly develop plans and operate on a semi-autonomous basis.
Using data analytics and digital technologies, a digital supply chain can make better decisions, perform better, and respond quickly to changing conditions.
Why do we need supply chain management?
Mentoring effectively:
A company can efficiently monitor every step of its supply chain by employing a supply chain management system, which can ultimately save time and money by spotting problems early on.
Reducing costs:
An effective supply chain can lower the need to keep inventory, lowering the overhead expenditures for storage and security. On the other hand, a very low inventory puts more strain on distribution networks and makes them less resilient to supply chain shocks. Thus, it’s crucial to determine your ideal inventory amount.
Simplifying operations:
Using digital supply chain management software can make the supply chain less complicated and help businesses fulfill increased customer demands while maintaining stable costs.
Quality control:
Quality control issues can be identified earlier when you and your suppliers are operating under the same standards.
Any manufacturing business’s logistical operations would not be complete without supply chain management. Businesses can get visibility into their supply chain and improve decision-making by utilizing technology and data analytics. To develop trust and forge lasting relationships, businesses should concentrate on interacting with suppliers and customers.
And working with ACS, we will be managing your logistical part of the supply chain with all we’ve got. To help you reach your goal toward success, learn more about Why ACS is the best freight company for you.