Supply Chain Management: Definition and Objectives

Home Articles Supply Chain Management: Definition and Objectives

Supply Chain is the connection of different networks of an organization consisting of various individuals, resources, activities, technologies and departments. A supply chain is the process of converting raw material into finished goods with the use of all factors of an organization. Thus, the process of supply chain starts from the delivery of raw material to the delivery of finished goods. It requires consideration of each factor of production and add value in each step to provide quality goods and services to the customers. The proper integration of supply chain management at every step of an organization will increase revenues, decrease cost and add value to an organization to achieve overall objectives of an organization. It involves planning, controlling and execution of a production process.

Complexity of supply chain management

The supply chain management is very complex in nature as it integrates all the factors of a production process. The chain starts from supplier, manufacturer, distributor, retailer and final customer. For the effective implantation of production process an organization requires number of suppliers, customers and equipment’s to manufacture different goods and services. Thus, it increases the complexity of an organization to manage the supply chain for providing efficient and quality goods and services.

Objectives of supply chain management

  • Service orientation: The functions and activities of a supply chain are performed to provide better experience to the customers through efficient services. The experience of value driven by a customer depends upon the perception of customer. The experience of some customers will be good and contrarily for other customers I does not add any value for them. Thus, it is a subjective matter.  
  • System orientation: the supply chain management integrates all the activities and processes through proper co-operation and coordination of all the factors and segments of an organization. The implementation of supply chain management is possible if the organizational system has been considered while planning each and every step of production.
  • Competitiveness and efficiency: the major objective of implantation of the supply chain management in an organization to achieve higher efficiency and have competitive advantage in the market. The integration of each step of production process will provide value to an organization and improves the sustainability of an organization in the market.
  • Minimizing the time: The proper management of each step of production process will require less time to convert raw material to finished goods, because of reduced lag time and increase in effectiveness of business processes.
  • Minimizing work in progress: the proper management and reduced lag time in production process will minimize the work in progress.
  • Improving pipeline visibility: the proper management of each step will encourage transparency in the business organization. The improved visibility will improve experience of customers with the company.
  • Improving visibility demand: With the planned activities, an organization can ascertain demand of goods and services and plan production accordingly. It will also reduce wastage of resources.
  • Improving quality: For the success of supply chain management, an organization has to follow the practice of Total quality management (TQM). The commitment of TQM in all the factors and steps of an organization will improve production and build goodwill of an organization in the market.

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