14 Jan The importance of Supply Chain in Business Management

The importance of Supply Chain in Business Management

Supply Chain demonstrates its importance by being present in all stages of a product’s useful life, including the purchase of raw materials, storage, among others.

You have certainly heard about supply chain, and probably have some knowledge about it. But if not, we can help you.

This article was made to explain the importance of Supply Chain within a company and how to have a good management of this process.

What is Supply Chain?

It is a system that covers the activities of production, acquisition with suppliers, storage and distribution of the products or services of a specific company.

To obtain positive results, all activities must be very well planned and optimized, being in sync and without possible obstacles.

How relevant is the Supply Chain?

The Supply Chain focuses to generate the highest possible customer satisfaction, optimize all stages of production and reduce unnecessary costs, thereby increasing the profit margin.

In addition, the Supply Chain is also used as a marketing technique and to add more value to the product, making it stand out among others in the market.

Therefore, when it is in full operation, the Supply Chain makes it possible to exchange information in all sectors, making them work in a more organized way and with the least possible failures.

Supply Chain Management (SCM)

This term was used for the first time in 1982, by Keith Oliver, who defined it as “a process of planning, implementing and controlling supply chain operations, with the aim of satisfying customer requirements in the best possible way […] “.

A long time has passed, this concept is in some ways no longer exactly the same, the supply chain today is all over the globe, and its management has many other objectives that have already been mentioned here (cost reduction, increase in efficiency and greater customer satisfaction).

Supply chain management is a very important part of this whole process, mainly because it is responsible for all planning, data analysis and other things that help optimize services and even for the company to prepare for possible chaotic scenarios, such as the new Coronavirus pandemic.

Necessary Elements for a Modern SCM

ERP: Enterprise Resource Planning Solution – responsible for managing all the actions of a company;

EDI: Electronic Data Interchange – facilitates the integration of external data, providing data in a secure way for payments between companies;

TMS: Transport Management System – crucial for busy distribution centers, being able to assume several basic functions of the shipping department;

WMS: Warehouse Management System – manages all the operations of a warehouse, available as a stand-alone or as a module within an ERP.

Good Supply Chain Management can have several benefits, such as cost reduction, increased profits, greater security, understanding purchasing trends, compliance with government regulations, among others.