How to Cut Supply Chain Management Costs

Supply chain management refers to both a field and a practice. Managing a supply chain includes documenting communications pathways, supply lines, production processes, and delivery routes and schedules. After documentation, it extends to honing the pathways and processes to create straightforward flows that reduce time and effort while still ensuring a timely, quality product.

Overview of Supply Chain Management

Supply Chain Management

Supply chain management (SCM) refers to the flow of raw materials, goods, and services through work processes to form a final product. A supply chain includes all pieces of a business: infrastructures such as information systems, research, and development, production and manufacturing. It encompasses both the actual materials and supplies and the people who provide them and use them.

Using methods such as lean management and lean manufacturing, firms streamline their supply chain to trim costs, streamline manufacturing processes and deliver high-quality products to their customers in less time. Proper SCM provides a company with “a sustainable competitive advantage,” according to North Carolina State University.

Best Ways to Cut Costs in the Supply Chain Flows

One key to streamlining the supply chain involves its mapping. Mapping flows go beyond what occurs within the confines of the business itself. It includes the purchase and transport of raw materials from vendors, therefore it must include those processes. The flows mapped include physical and information flows.

What is a Physical Flow?

Most people think of the physical flows foremost since they remain visible. These include the raw materials, their transport, their storage and their transformation through the manufacturing process.

What is an Information Flow?

Each organization also needs a map of its information flows, the processes by which it communicates and coordinates with its partners and vendors. This extends to both long-term planning and day-to-day communication that ensures the constant flow of materials and finished goods to market.

Positions Related to SCM

You’ll encounter many roles in the course of mapping flows. SCM includes a plethora of professional positions in the administration of its workings. These positions include those in:

  • government agencies,
  • logistics firms,
  • manufacturers,
  • retailers,
  • service firms,
  • transportation firms.

Fields related to this area encompass those in inventory control, logistics, operations, purchasing, product development, quality management, sourcing and procurement, supplier relationship management and traffic analysis. Common positions include business intelligence analysts, business process consultants, new products project managers, procurement manager, supply chain strategist, supply and demand planner and vendor relations manager. Each of these positions works with others to ensure material, manufacturing and product flow.

Successful supply chain management practices require procedural documentation and analysis. Management can use a variety of methods for determining ways to boost efficiency and streamline the supply chain, but the most common include lean methodology, including applying the kaizen practice of small, immediate adjustments to production flows on the manufacturing floor. Although commonly used in manufacturing, lean methods also work for streamlining front office and back office procedures and workflows.

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