Supply Chain Management: Importance, Benefits, Processes and Elements

Running Head: SUPPLY CHAIN MANAGEMENT
SUPPLY CHAIN MANAGEMENT
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SUPPLY CHAIN MANAGEMENT
Introduction
Supply chain management precisely means the process involved in planning, controlling and
execution of a product’s flow, ranging from the acquisition of raw materials, production, all
the way to the distribution to customers in the most effective, efficient and cost-effective
manner. Supply chain management is a crucial component in any organization because it has
the tendency to determine the fate of the business in terms of success. Supply chain
management involves a coordinated planning and execution process needed to enhance the
flow of information, materials and financial capital in areas such as sourcing, production,
inventory management, demand planning, transportation and storage as well as the return of
faulty or excess products. Organizations integrate both business strategies and specialized
supply chain management software to be in a position to create competitive advantage
(Harris, 2015). There are two terms usually confused or used interchangeably while they
don’t mean the same. These terms are logistics and supply chain. It should be appreciated that
logistics is a component of the supply chain that aims at the movement or flow of goods,
services and other information from the supplier or producer to the point of consumer
consumption efficiently and in a cost-effective manner. This paper looks at the topic supply
chain management at different angles such as its importance, the processes involved and its
essential elements.
The benefits of supply chain management
Various benefits accrue to a company or any other business unit as a result of supply chain
management. Firstly, it boosts customer service. In a business perspective, every consumer
would want to receive the ordered or purchased products in the right assortment and quality.
This role is played by supply chain management. Place utility is very critical in any business.
Customers expect to get the commodities they demand available at the required places.

SUPPLY CHAIN MANAGEMENT
Supply chain management ensures that the commodities are availed at the essential points of
consumption. Supply chain management also ensures that the products demanded are
delivered at the right time and that there is good after sales support thereby improving
customer’s service.
Supply chain management is also responsible for the reduction of operating costs within an
organization. One of the ways of doing that is by ensuring fast delivery of expensive products
to avoid high inventory costs. Again, an organization would rely on supply chain
management to ensure that raw materials are timely delivered to assembly point with the
view of preventing shortages that may lead to a temporary shutdown of the operations (Waas,
2014). It also ensures that total supply chain cost is reduced. Supply chain management
ensures that the best strategies are put in place so that delivery is done at the least total cost
possible.
Another vital role of supply chain management is improving the overall financial position of
a company. Supply chain management lead to profit margin increase by lowering the cost of
production. Lowering the cost of production in a company would at long-run increase the
number of profits earned by the company. Supply chain management also reduces the number
of fixed assets used the supply chain that may be expensive to acquire (Armstrong, 2014).
For instance, reducing the number of vehicles or storage warehouses would save the company
a considerable amount of money. Supply chain management also increases the cash flow
within an organization. It ensures timely delivery of commodities to customers hence
growing the cash flow.
While supply chain management is vital in the business world, it is also a crucial feature of
societal development and prosperity. For instance, its knowledge helps in human survival by
improving healthcare, protecting human beings from climatic change hazards among other