Supply chains management or what is often referred to as supply chain management (SCM) is a major activity carried out by companies so that market needs can be met. 

These companies usually include suppliers, manufacturers, distributors, retail stores, and logistics service companies. The supply chains covers everything from management activities that include sourcing of raw materials, disseminating information, sending orders to developing the latest products needed to guide ongoing businesses. 

The main function of this supply chains management is the relationship between various kinds of physical costs in the form of material costs, storage costs, special costs of production, costs for transportation, and so on.

It can be concluded that supply chain management has a very important role in improving a company’s service to customers in it, either directly or indirectly. SCM is not only oriented to the internal affairs of a company, but also external affairs concerning relationships with company partners.

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Supply Chain strategy is the backbone of a company’s business activities. In carrying out the SCM, a strategy is needed so that it can run as desired so as to reduce the possibility of problems that will occur.

The strategies that must be carried out include: negotiating with suppliers, developing partnership relationships, increasing customer response to stay competitive and virtual company

Supply chain management has 3 components in it, such as:

Upstream supply chains

The company positions itself as the main link and connection to consumers who will market their products .

Downstream supply chain

Management in charge of directly distributing a product to consumers or customers. The main thing about this distribution is the direction of distribution, transportation and warehousing systematics.

Internal supply chain

This management system has a function to manage the income and availability of raw materials and manufacturing. Internal supply chain has main activities consisting of production and manufacturing management for raw material control.

Supply Chain Management

Process This supply chain management process is divided into three types based on their responsibilities, including:

  • Material Flow

This process involves the transfer of raw materials from suppliers to consumers and also from consumers who are returned or returned products, services, recycling and disposal.

  • Information

Flow This information flow contains prediction of demand, information on the movement of goods, and also updates on the status of goods whether they have been sent or not.

  • Financial Flow

This process is filled with payment, credit flow, payment scheduling to ownership approval.

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SCM Network

Chain1. Supplier

Network starts from the supplier who is the source that supplies the first material, where the new supply chain will begin. This can be in the form of raw materials, raw materials, auxiliary materials, merchandise, spare parts and so on.

Chain 1-2. Supplier – Manufactures

The first chain is connected with the second chain, namely Manufacturers of other forms that do the work of making, fabricating, assembling, converting or finishing goods (finishing). The relationship between the two chains already has the potential to make savings. 

Chain 1-2-3. Supplier-Manufactures-Distribution

Initially, a manufacturing company will produce goods. After the goods have been produced, the goods are distributed to customers. 

Chain 1-2-3-4. Supplier-Manufactures-Distribution-Retail Outlet

Wholesalers usually have their own warehouse facilities or can also rent from other parties. This warehouse is used to store goods before they are distributed again to the retailer. Here, you can take advantage of this stage to make savings in the form of inventory quantities and warehouse costs by redesigning the pattern of shipping goods from both the manufacturing warehouse and to the retail store.

Chain 1-2-3-4-5. Supplier-Manufactures-Distribution-Retail Outlet-Customer

Retailers or retailers offer goods directly to customers or buyers or users of goods directly. Included in the retail outlet category are grocery stores, supermarkets, stalls and so on.

The benefits obtained when your company applies the following SCM.

  • Getting customer satisfaction Customer

satisfaction can be obtained, because if consumers are satisfied with the services provided by your company, then they will become loyal consumers who use the products of your business for a long time.

  • Utilization of high assets

Assets, especially labor, will be increasingly trained and skilled in terms of knowledge and skills. In addition, the workforce is increasingly adept at using high technology.

  • Increase profit

The more consumers use the products from your company, the more profit the company will generate because the products offered are sold out.

  • Reducing costs

This benefit can be achieved because of the integration of product flow from the company to the end customer. Cost reduction occurs because costs in distribution channels are cut.