What is logistics and supply chain management?

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Supply chain management (SCM) efficiency can help companies improve efficiency, reduce costs and improve customer satisfaction. It requires cooperation between all stakeholders in the supply chain, including suppliers, manufacturers, distributors, retailers, and customers. Let's Johnson's Blog Find out more details through this article.

What is Supply Chain Management (SCM)?

Supply chain management (SCM) is the process of managing and optimizing the flow of goods, services, and information from the point of origin to the point of consumption. It involves the coordination and integration of all activities involved in the production and distribution of goods and services, from sourcing raw materials to delivering finished products to customers.

SCM covers a wide range of activities, including:

Planning and forecasting: Forecast demand, create production schedules and set inventory levels.
Sourcing: Search and select suppliers, negotiate contracts and manage supplier relationships.
Manufacturing: Manage production processes, ensure quality control and maintain efficient operations.
Logistics: Manage the movement of goods from suppliers to customers, including transportation, storage and distribution.
Customer service: Ensure that customers receive their orders on time and that their needs are met throughout the process.

Logistics and supply chain management will be the management of the entire connection network of businesses involved in providing goods and products to consumers. This requires many different stages such as storage, transportation of materials, handling inventory, manufacture,…

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Key points of SCM

Here are some key points of supply chain management (SCM):

SCM is concerned with the coordination and integration of activities involved in the production and distribution of goods and services, from sourcing raw materials to delivering finished products to customers.

SCM covers a wide range of activities, including planning and forecasting, sourcing, manufacturing, logistics, and customer service.

Effective SCM can help companies improve efficiency, reduce costs and improve customer satisfaction.

SCM requires cooperation between all stakeholders in the supply chain, including suppliers, manufacturers, distributors, retailers, and customers.

Technology, such as supply chain management software, can help companies manage their supply chains more efficiently.

SCM is a continuous process that requires continuous improvement and adaptation to changing market conditions and customer needs.

Companies can gain a competitive advantage by having a well-managed and efficient supply chain.

Why is Supply Chain Management important?

Supply chain management (SCM) is important for several reasons:

Increase efficiency: Effective SCM can lead to increased efficiency in production, transportation and delivery, reduced waste and reduced costs.

Improve customer service: SCM can help companies improve customer service by ensuring that products are available when and where customers need them.

Improve the competitive ability: Companies implementing effective SCM practices can gain a competitive advantage by providing high-quality products at lower prices and faster delivery times.

Risk management: SCM can help companies identify and manage risks in their supply chains, such as disruptions to raw materials or delays in shipping.

Environmental Sustainability: SCM can help companies reduce their impact on the environment by optimizing transportation routes, reducing waste, and implementing environmentally friendly practices in the production and transportation of goods.

Cooperation and communication: SCM requires collaboration and communication between various stakeholders, including suppliers, manufacturers, distributors, and customers, which can improve relationships and drive innovation.

Effective SCM is essential for companies to succeed in today's global marketplace. It helps companies reduce costs, improve efficiency, improve customer service, manage risk and promote sustainability, among many other benefits.

How Supply Chain Management (SCM) Works

Supply chain management (SCM) involves the coordination and integration of activities involved in the production and distribution of goods and services. These are the stages:

PlanningThe planning phase includes forecasting demand, creating production schedules, and establishing inventory levels. Companies must also identify and select suppliers, negotiate contracts, and manage supplier relationships.

Find the source: In the sourcing phase, companies work with suppliers to obtain raw materials, components, and other resources needed to manufacture their products. This involves coordinating deliveries and ensuring that suppliers meet quality and delivery standards.

Perform: The production phase is concerned with managing the production process, ensuring quality control and maintaining efficient operations. Companies must also manage inventory levels, track production progress, and coordinate with suppliers and logistics providers.

DistributionDelivery: The delivery phase involves managing the movement of goods from the supplier to the customer, including transportation, storage, and distribution. Companies must also manage inventory levels, track shipments, and coordinate with customers to ensure timely deliveries.

To return: During the return phase, companies manage return and exchange processing, including managing inventory levels, handling returns, and ensuring customer satisfaction.

Plan

The planning phase of supply chain management (SCM) includes forecasting demand, creating production schedules, and establishing inventory levels. Here are some key steps involved in the planning phase:

Demand forecast: Companies use historical data, market trends, and other factors to forecast demand for their products or services. This helps them determine how much inventory they need to produce to meet customer demand.

Create production schedule: Based on demand forecasts, companies create production schedules outlining production times and quantities. This helps companies manage inventory levels and ensure that they have enough product on hand to meet customer demand.

Set inventory levels: Companies set inventory levels based on their production schedules and demand forecasts. They must balance the need to have enough inventory to meet customer demand with the cost of holding excess inventory.

Identify and select suppliers: Companies identify and select suppliers who can provide the raw materials, components, and other resources needed to manufacture their products. This involves evaluating potential suppliers based on factors such as quality, price, and reliability.

Contract negotiations: Once a supplier has been selected, companies will negotiate a contract that outlines the terms of the relationship, such as pricing, delivery schedules, and quality standards.

Manage supplier relationships: Companies must also manage supplier relationships to ensure that they meet their obligations and deliver materials and components on time and at the expected quality level.

Develop contingency plans: Companies should also develop contingency plans to deal with potential supply chain disruptions, such as natural disasters or unexpected changes in demand.

The planning phase ensures that companies have the right inventory levels, production schedules, and supplier relationships to meet customer demand and stay competitive.

Find the source

The sourcing phase of supply chain management (SCM) involves working with suppliers to obtain the raw materials, components, and other resources needed to manufacture a product. Here are some key steps involved in the sourcing phase:

Identify potential suppliers: Companies identify potential suppliers who can provide raw materials, components, and other resources needed to manufacture their products. This involves evaluating potential suppliers based on factors such as quality, price, and reliability.

Supplier rating: Companies evaluate potential suppliers based on many factors, including quality, price, delivery time, and reliability. This helps them choose the best suppliers to work with.

Contract negotiations: Once a supplier has been selected, companies will negotiate a contract that outlines the terms of the relationship, such as pricing, delivery schedules, and quality standards.

Manage supplier relationships: Companies must manage supplier relationships to ensure that they meet their obligations and deliver materials and components on time and at the expected quality level.

Monitor supplier performancep: Companies should monitor supplier performance to ensure that they are meeting their contractual obligations. This involves tracking delivery times, quality levels, and other performance metrics.

Develop contingency plans: Companies should develop contingency plans to deal with possible supply chain disruptions, such as natural disasters or unexpected changes in demand. This may involve identifying backup suppliers or developing alternative supply chain routes.

The sourcing stage ensures that companies have the reliable and cost-effective sources of raw materials, components, and other resources needed to manufacture their products. Effectively managing supplier relationships and monitoring supplier performance are key to ensuring that the supply chain operates efficiently and effectively.

Perform

The implementation phase of supply chain management (SCM) involves managing the manufacturing process, ensuring quality control, and maintaining efficient operations. Here are some key steps involved in the creation phase:

Production management: Companies manage the manufacturing process to ensure that products are produced efficiently and effectively. This involves planning production runs, managing inventory levels, and coordinating with suppliers to ensure that materials and components are available when needed.

Guaranteed quality control: Companies must ensure that the products manufactured meet the expected quality standards. This involves implementing quality control measures such as inspection, testing and process control.

Operation Optimization: Companies are constantly looking for ways to optimize their production operations to improve efficiency, reduce costs and improve quality. This may involve implementing lean manufacturing techniques, using automation to streamline processes, and adopting new production technologies and methods.

Manage inventory levels: Companies must manage inventory levels to ensure that they have enough product on hand to meet customer demand without having to hold excess inventory that causes capital constraints.

Coordinate with suppliers and logistics providers: Companies coordinate with suppliers and logistics providers to ensure materials and products are delivered on time and at the expected quality level. This involves managing relationships with suppliers and coordinating shipments and logistics.

The production phase ensures that products are produced efficiently, efficiently and to the expected quality levels. Effective management of the production process, quality control and inventory levels are key to achieving this goal.

Distribution

The distribution phase of supply chain management (SCM) involves getting products to customers in a timely and cost-effective manner. Here are some key steps involved in the delivery phase:

Distribution planning: Companies plan distribution strategies to determine the most efficient and cost-effective way to get products into the hands of customers. This involves considering factors such as delivery time, shipping costs, and the location of the customer.

Shipping ManagementShipping: Companies manage shipping to ensure that products are delivered on time and at the expected quality level. This involves choosing a carrier, coordinating shipments, and tracking delivery times and performance.

Manage inventory levels: Companies must manage inventory levels to ensure that they have enough product on hand to meet customer demand without having to hold excess inventory that causes capital constraints. This involves monitoring inventory levels and adjusting production and distribution schedules as needed.

Coordinate with logistics service providers: Companies coordinate with logistics providers to ensure that products are delivered on time and on schedule

Customer relationship management: Companies must manage relationships with customers to ensure that they are satisfied with the products and services they receive. This involves providing outstanding customer service, addressing customer concerns and complaints, and soliciting customer feedback.

The delivery stage ensures that products are delivered to customers in a timely and cost-effective manner. Effective management of distribution, transportation and inventory levels, as well as strong customer relationships, is key to achieving this goal.

To return

The return phase of supply chain management (SCM), also known as reverse logistics, involves managing product returns and handling defective or damaged products. Here are some key steps involved in the rollback phase:

Develop a return policy: Companies develop a return policy that outlines the conditions under which a product can be returned, including the reason for the return, the return period, and the procedure for returning the product.

Receive returned products: Companies receive returned products from customers or retailers and test them to determine if they can be resold, repaired, or disposed of.

Manage inventory levels: Companies must manage inventory levels of returned products to ensure that they have the capacity to handle returns without incurring excess costs or inventory.

Repair or refurbish the product: If returned products can be repaired or refurbished, companies will do so to return them to marketable condition.

Dispose of the product: If returned products cannot be resold or refurbished, companies must dispose of them in an environmentally responsible manner.

Handling warranty claims: Companies that handle warranty claims, ensure that customers receive a replacement or refund as requested.

The return stage ensures that customers are satisfied with their product and that it is handled responsibly and cost-effectively. Effective management of product returns, repairs, refurbishments and disposals and robust customer service and warranty programs are key to achieving this goal.

Example of SCM

Here's an example of how supply chain management (SCM) works in practice:

Suppose a company manufactures and sells laptops. The SCM process for this company might look like this:

Plan: The company plans production and distribution schedules based on customer demand and sales forecasts. This involves forecasting demand, estimating inventory needs, and coordinating with suppliers and logistics providers.

Source: The company sources raw materials, such as components and parts for laptops, from a variety of suppliers. It negotiates prices, terms and delivery schedules with suppliers and ensures that they meet quality and sustainability standards.

Manufacturing: The company manufactures laptops at its manufacturing facilities, ensuring that they meet quality standards and production schedules.

Distribution: The company ships laptops to its customers through different modes of transportation, such as air, sea or land. It tracks shipments and delivery times, and coordinates with logistics providers to ensure that products arrive on time and in good condition.

Returns: If a customer returns a laptop computer due to defect or other reason, the company will follow the return policy and manage the return process, including repair or refurbishment, inventory management, and disposal. products are not for sale.

Epilogue

Supply Chain Management (SCM) is a critical process involved in planning, sourcing, manufacturing, delivering, and returning products and services. Effective SCM can lead to increased efficiency, improved customer service, enhanced competitiveness, risk management, environmental sustainability as well as cooperation and communication between different stakeholders.

To achieve these benefits, companies need to develop robust SCM strategies, processes and systems that optimize their operations, reduce costs, and improve quality and satisfaction. of cutomer. By implementing effective SCM activities, companies can gain competitive advantage, increase profitability and contribute to a more sustainable and socially responsible economy.

Hopefully through the above article you can better understand what Logistics and supply chain management is and to manage your business's supply chain smoothly and effectively. Johnson's Blog for advice.

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