Definition of Supply Chain Management (SCM)

What is the Supply Chain Management (SCM)? SCM or commonly referred to as chain management is the coordination of material, information and financial flows between the companies. Supply Chain Management can be referred to as "all kinds of activities of basic commodities to the sale of products to consumers. The value chain inventory, the company management (customer relationship value chain or business process) is done with the aim to improve advantage to the fullest. "

Read More: Definition of Business Process Reengineering (BPR)

Main Objectives Supply Chain Management:

  • To get the right products according to the needs, products are required according the right place, the required product available at the right time, products are required in accordance in the right amount, and products required in accordance with an acceptable cost / fair
  • With the SCM, the main focus is only on the competence of the company where the goods to outsource other activities, to reduce costs, to reduce inventory, for improvement or business process cycle time, and to provide services / service that can satisfy the customer
  • To improve work processes and execute business processes with a focus on improving ways of working more efficiently, especially in terms of serving the customer demand
  • Exercise control over the inventory (inventory control)
  • Improving relationships with customers, suppliers, distributors, and other concerned parties,
  • Receiving feedback (feedback) or in response to complaints / grievances in the process related to the supply chain / inventory 

Benefits of Supply Chain Management:

  • Inventory reduction, automatic a reduction in stock inventory that is not needed, so the purchase of materials as required in the production process
  • Personnel reduction, the creation of a more efficient way of working, of course, will berpengarauh to use labor efficiently, whereby the use of labor will be supported by the workings of an integrated information system
  • Increased productivity, with the creation of an efficient way of working, automatically will eventually affect the level of productivity in the production process
  • Improved management, will to change of corporate culture better
  • Reduction of cost with the support of Information Technology, will be a reduction in costs, especially related to operational, eg, reduction in paper costs, because the SCM users, then all the information can be done via a screen (not required to do print-out
  • Reduction of procurement costs, of course, will be a reduction of the cost of procurement of goods, which allows the SCM system happens online employment relationship with the supplier
  • Improvement of cash management, will certainly enhance the efficient management of cash flows, which will be monitored transaction cash flows (income and expenditure) in detail
  • Revenue / profit increase, of course, will affect the company's income or profit to the maximum,
  • Transportation logistics cost reduction, will certainly affect the cost of transportation, because transactions can be conducted online allowing
  • Reduction of maintenance costs, will certainly affect'll efficiency in maintenance costs
  • Improved on-time delivery, of course, will affect the delivery of goods to the customer in a timely manner, because termonitornya receipt of goods from the supplier according to the time in the production process

Impact of Supply Chain Management for the Company

  • Business processes more efficient, it will affect the way in running the business processes become more efficient
  • Rapid response to customer complaints, will certainly affect the speed in handling grievances / complaints of the customers, with the goal of improving the quality of service for customers
  • The existence of Standardization, will certainly affect the standardization of procedures that can be used as guidelines in determining the performance of a department
  • Business performance is better, of course, will affect the performance as evidenced by the results of a quality product and low complaints / grievances of customers instead it will improve the quality of integrated services to its customers
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