Is supply chain management important

Supply chain management

Supply Chain Management (SCM) is a control system as an extension of the business area of ​​conventional logistics in order to optimally accompany and control the logistical chain along the entire value chain. The supply chain extends from the raw material supplier through production and storage to the end customer or consumer. The supply chain management controls the flow of money, the flow of materials and the flow of information along the entire value chain. While the conventional logistics term refers to the individual companies and the corresponding material and information flows, the entire network of the value chain, including the cash flows, is controlled within the scope of supply chain management.

Goals of supply chain management

Basically, all goals of supply chain management are based on the highest corporate goals. The top priority is the organization and optimal design of the smooth flow of the supply and supply chain as well as the production processes. To name specific fine targets:

Reduction of storage costs

Information strategy improvements
Reduction of lead times
Definition and use of synergy effects along the value chain
Increase in customer satisfaction
Increase in response times
Improvement in adherence to deadlines
Shortening delivery times
Reduction of production and idle times
Optimization of supplier selection etc.

The achievement of goals always serves to increase the success of the entire company. Structuring the supply chain results in a collaboration between different companies with the common goal of producing and marketing a product or service.

Difficulties in implementation

The networking of all companies involved in a value chain requires a comprehensive information strategy with appropriate technology (e.g. communication technology and planning strategies). The implementation in all participating companies is sometimes difficult. Organizational structures are often run-in and unsuitable, employees block themselves against new structures and processes or the goals of supply chain management have been unclearly defined. The introduction of a supply chain management system results in costs, whereby these must be compared with the corresponding benefits in order to be able to draw a clear conclusion on this level.

Challenges

Supply chain management is increasingly faced with major challenges, not least due to the growing demands of customers: flexible ordering options, short delivery times, subsequent options for order changes and adjustments, precise delivery date promises, etc. The more a company can meet the requirements and wishes of customers can, the greater the promising competitive advantages. In order to achieve the optimal design of the entire value chain, it is important that the focus is not placed too much on individual goals (e.g. capacity utilization) of individual companies. It is important to focus on cross-company goals that affect the entire value chain. The definition of goals must be based on the cornerstones of quality, time and costs. It is not uncommon for contradicting target definitions to appear that require a compromise solution.

Success factors in supply chain management

Thanks to the improved planning coordination of the entire value chain, overarching corporate goals can be achieved. Partnership-based cooperation between the companies concerned (e.g. between production company and supplier) can have a positive influence on the company's success. The focus is on increasing effectiveness and efficiency in all phases of the value creation process. In addition, there is the essential aspect that competent, open-minded employees are just as important for the success of a supply chain management system as open and flexible company structures. Successfully implemented optimizations of the logistic processes can become unbeatable success factors, even decisive competitive advantages. The optimized structure of the supply chain can also be seen as a promising aspect in the context of innovation funding.

The importance of supply chain management as a success factor is steadily increasing in both small and medium-sized as well as large companies.