In a dynamic business environment, organizations should understand the components of SCM and the principles of SCM. Essentially, Supply chain management is the administration of the flow of goods and
related information from origin to consumption. Thus, it involves streamlining businesses ‘supply activities to maximize customer value and gain a competitive advantage in the marketplace. The components of SCM entails five functions. They include planning, sourcing, production, distribution, reverse logistics, and customer interface. Proper management of SCM activities enables companies to cut excess costs and
reduce lead times. Thus, all parties in the value chain need to apply the principles of SCM. Notably, these principles focus on customer relationship management, flexibility, responsiveness, and synchronization
of supply and demand. In conclusion, SCM ensures cross-company, process-oriented planning, and control of the entire value chain.
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THE PROCESSES AND COMPONENTS OF SCM
The components of SCM includes four vital phases. First, planning entails developing long-term and short-term integrated supply chain strategies. These strategies focus on the SC network design, demand forecasting and fulfillment, and resource allocation. Secondly, procurement is the purchase of required raw materials, components, and goods. Key processes include ordering, receiving, managing inventory, and authorizing supplier payments. Thirdly, production involves the manufacture of materials into finished goods or parts for other products. Supply chain managers should apply the principles of SCM for faster demand fulfillment. Lastly, distribution is the logistical flow of goods across the supply chain. Delivery
involves coordinating customer orders, scheduling delivery, dispatching loads, invoicing customers, and receiving payments. Therefore, Supply Chain management oversees each touchpoint of an organizational
product or service, from initial creation to the final sale.
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THE FOUNDATIONS AND PRINCIPLES OF SCM
The principles of SCM include customer segmentation and market positioning based on service needs. Secondly, customizing the logistics network to the service requirements and profitability of customer segments. Thirdly, assessing market signals and aligning demand planning accordingly across the supply chain. Fourthly, product differentiation, and development according to consumer specifications. Fifthly,
developing close relationships with suppliers and ensuring the end to end information sharing and visibility. Sixthly, integrating the components of SCM with other functional areas of the business. Moreover, developing strategies for continuous cost reduction and resource optimization across all stages of the value chain. Lastly, adopting channel-spanning performance measures to gauge collective success in reaching
the end-user effectively and efficiently. In conclusion, supply chain management constitutes logistics principles practices, strategies, and initiatives aimed at fulfilling customer demand.
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