Key Functional Areas of Supply Chain Management in Business

Broadly speaking, supply chain management includes processes, systems and strategies to optimize the production and distribution of products. Its aspects include demand planning, inventory management, logistics, procurement and supplier management.

In contrast to its original goal of optimizing manufacturing, today supply chain management is closely linked to technology. However, global integration and accurate data are needed to create a successful process.

Functional Scope of Supply Chain Management

It will not be easy to restore the global supply chain, especially after being affected during the pandemic. Supply chain management explains the terminology, processes, trends and challenges that need to be understood to address emerging challenges in business. For this reason, you need to understand the scope of the supply chain management area well.

1. Purchasing

In running a business, purchasing has several main objectives including maintaining the quality and value of the company's products, minimizing cash tied up in inventory, maintaining input flows to ensure output flows, and strengthening the organization's competitive position.

2. Manufacturing

The manufacturing function became an important area as companies moved various supervisors of production operations. Manufacturing plays a key role in the US economy because many products will always be produced. From food to cars, companies will continue to produce because of the many skilled labor and natural resources in the US.

3. Inventory management

The goal of inventory management is to provide uninterrupted levels of production, sales, and/or customer service at minimum cost. Inventory problems can and do contribute to loss or even business failure.

Inventory management is the main function of every manufacturing company, both domestic and foreign. Physical inventory is often one of a company's most important assets. Without a proper physical inventory, the company will have no sales.

It's important to have the right product, in the right place at the right price, and inventory makes this possible. In today's global economy, the inventory function has become even more important and challenging because products can be produced and available anywhere in the world.

4. Demand Planning

Demand planning is the process of forecasting customer demand to drive the execution of requests from corporate supply chain and business management. This involves informal methods such as educated guesses and quantitative methods.

The use of historical sales data and statistical techniques is the latest method used through market research. Demand planning can be used in production planning, inventory management, and future demand assessment in making decisions when entering new markets.

5. Warehousing

The performance of administrative and physical functions associated with the storage of goods and materials in a business is known as warehousing. These functions include receipt, identification, inspection, verification, storage, retrieval for problems, and so on.

While many people view the warehousing function as a simple process of storing products, it has grown more complex. In mass customization, the warehouse has developed into a distribution center and a facility for customizing the final product through packaging, labeling, and other physical conversions.

The warehousing function has evolved as a last stop before arriving at the customer. Handling, storage and management of products in warehouse facilities must be carried out so that customers get products at the right time.

6. Transportation

The transport function is very important to the supply chain because that's where the roads are. A business can have the right product in the right warehouse at the right time. In today's global economy, the function of transportation is more important because it is not as easy as putting the product on a truck and delivering it.

Today, shipments may be made via container ships, airplanes, trains, trucks or even cars before reaching the customer. Companies must evaluate the many different dimensions of each option such as cost, speed, reliability, and serviceability when deciding which option to go with.

7. Customer Service

After everything is done, a process is needed to ensure customer satisfaction with the product or service. Customer service or customer service is often needed when making transactions such as making sales or returning goods.

Customer service can be in the form of direct interactions, telephone calls, self-service systems, or in other ways. Although the customer service function appears to be at the end of the supply chain, it is clearly not the end of the process.

The customer service function is very important to meet customer needs and ensure customers receive the desired service. This may be the only contact point a business has for understanding customer needs.

Overall, every company requires supply chain management to be able to provide optimal service from the production process to after sales. This is what can keep the whole process in the business going well.