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Supply Chain Management

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Supply Chain Management " SCM " is the structural management of goods flows, information flows and the organization responsible for them.

In a subsequent article, we look in more detail at the emergence of SCM, but in summary we can state that until the 1960s and 70s the purchasing, planning, storage, transport and customer administration department were independent of each other.

The " logistics " were mainly limited in the interactions between the own company and the customer, with mainly the flow of goods " the delivery " and the accompanying documents to formalize it. Logistics was considered a pure cost factor.

Since then, a lot has changed, making a completely different approach necessary:

- Companies were forced by the market to change from production-oriented to customer-oriented entrepreneurship
- Globalization not only means that more producers are on the market, but also that there are larger players, that more options are created and that delivery times are becoming longer.
- With the emergence of more powerful computers with standard solutions that also become affordable for smaller companies, much more information can be processed and kept up to date.

Supply Chain Management today

In modern Supply Chain management we not only look at the flow of goods from the extended chain " from the supplier from the supplier to the customer of the customer and sometimes even longer ", but also at the information flows in the other direction. In addition, we view all of this in time:

- What are the market expectations in the short and medium term?
- What impact does that have on my customers?
- What impact does that have on our company and suppliers?

The sooner we can respond to new trends, the greater the chance that we will be able to deliver the right products and services in the future and the smaller the risk that we will be left with stock that we have to write off because of no longer desired.

In practice

Anecdote: when in the 1990s I was responsible for European inventory management in medical devices and together with marketing made sales forecasts for the next 3 years, it often happened that we already planned the phasing out of a product line before it was on the market; the next two generations were already under development.

To manage all this efficiently, the various aspects of chain management must be seamlessly linked to each other; a new order from a customer can have an impact on production plans and on the purchase of raw materials or semi-finished products, without weeks taking to respond to that new need.

Strategic tool

Integrated chain management also poses some strategic issues:

- Do I want a centralized or decentralized network, or a mixture of both " eg products with high demand decentralized and those with limited demand centrally "
- How can I combine flexible demand with fast delivery times; in other words do I keep a wide range of end products in stock or do I stock all raw materials and parts and do I invest in a flexible production device? Mixed forms are also possible here.
- What do I do myself and what can I outsource better, such as transport?
- What are the business values ​​that I want to embed in my chain management: speed, quality or as cheaply as possible?

Supply Chain is no longer a pure cost factor, but a strategic tool that serves as a backbone for the company. The old-fashioned production-oriented company, which looked at how it could sell its products on the market, is pushed aside by the customer-oriented organization with better chain management. In modern times, production knows only one customer, its own Supply Chain department, which must ensure that the various end customers are optimally supplied according to the set priorities " it used to happen regularly that the most complaining customer was given priority in production... "

Supply Chain is also the contact person or agent of all suppliers to the production. Supply Chain will be responsible for processing all incoming and outgoing goods flows and information flows, as well as for storage of all forms of products.

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