The streamlining of supply-side activities of a business to maximise customer value and for gaining a competitive stand in the market place is called supply chain management (SCM). It is an effort by suppliers to create and implement supply chains which are as efficient and economical as possible. Supply chain involves activities such as production, product development and information systems.
Through supply chain that is one service that Boundless provides, companies can provide products faster and are able to cut down excess fat. This is further executed through tighter control of internal inventories, internal production, distribution, sales and inventories of the company's purchasers of the product. SCM will attempt to centrally control the manufacturing, shipping and distribution of products.
Almost every product that comes in the market is a result of efforts of varied organisations known as supply chain.
What are supply chain management principles?
Andersen Consulting has provided what it calls are the seven supply chain management principles. These principles provide much-needed guidance. When consistently followed, the principles provide an array of benefits. The principles are:
- · Segregate customers based on the requirements of the service. SCM groups customers by distinct service requirements and then tailor services to those particular segments.
- · Customise the supply chain management network. This can be done through companies by focussing on service requirements and profitability of the identified customer segments.
- · Listen to market demand signals and plan accordingly. Sales and operational planning must run across the entire supply chain to identify early warning signals of changing demands in order patterns, consumer promotions etc. The demand approach leads to more consistent anticipation and optimal allocation of resources.
- · Product should be differentiated closer to the consumer. Companies should not store inventory to compensate for possible forecasting errors. They should postpone differentiation of products in the production process closer to the actual demand of consumers.
- · Supply sources should be strategically managed.Supply chain management organisations increase margins for themselves and their suppliers by closely working with suppliers to reduce the overall costs of owning materials and services.
- · Information technology needs to support multiple levels of decision making in SCM and should be able to provide a clear view of the product, service and information flow.
- · Implement performance measures in channels. Supply chain measurement systems track internal functions, include service and financial metrics such as every account's true profit.
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