Any product that you use in your day to day life is an outcome of several processes, techniques, strategies, and stakeholders coming together to deliver a solution to meet your requirement. A supply chain encompasses the activities that unfold right from the raw materials stage to the delivery and return stage.
Simply put, a supply chain is an upstream or downstream flow of organizational goods and services that make the final product, whereas the management of such an elaborate chain is called supply chain management. From being an integral part of any and every industry to erecting an influential industry of its own, supply chain management has essentially optimized and revolutionized the way industrial supply functions.
Supply Chain Management: Understanding The Scope
Before moving on to understanding how SCM is helping industries grow, we need to first understand and brush up the fundamentals. What exactly consists of supply chain management?
To begin with, as discussed above, Supply Chain Management is the efficient management of an integrated system of networks that are instrumental in taking a product from its inception stage to its delivery to the point of customer satisfaction. The management involves everything from design, planning, monitoring, quality control, and execution of all supplementing activities. These activities are broadly classified under two frameworks --
the SCOR framework that branches SCM into 5 different processes namely
and the GSCF framework that identifies a total of 8 contributing processes namely
- Customer Relationship Management
- Customer Service Management
- Demand Management
- Order Fulfillment
- Manufacturing Flow Management
- Supplier Relationship Management
- Product Development and Commercialization
- Returns Management
The former framework is focused on the elementary processes that achieve the goals of SCM while the latter emphasizes on building long term associations and establish an interlinking network in the industry while meeting those goals.
Key Attributes Of SCM That Empower Industry Growth
As understood from the sections above, supply chain management goes into the broadest of and most intricate details to deliver the product according to the customer’s requirement. Over the years SCM has experienced unprecedented growth, thereby expediting the growth of related industries, particularly engineering based. Having understood what lies beneath this growth, let’s have an overview of what primarily drives this growth.
Through extensive management as well as market analysis, we have curated a list of five key attributes of the supply chain management that are fundamental to empowering the growth of industries and engineering.
1. Long Term Approach
Supply Chain involves endless numbers of entities that work in unison. The efficient management of the supply chain, therefore, involves building and maintaining relationships within networks, expanding networks through relational and transactional exchanges, incorporating alliance strategies, arrangements, and contracts that reinforce and strengthen such relationships.
From an industrial point of view, this long term approach streamlines businesses and capitalizes on such long term associations, resulting in a boost in efficiency and ultimately profit margins. In simpler words, SCM ensures good long term associations between stakeholders in the elaborate supply chain that result in loyalty, productivity, and better outcomes.
2. Technological Leverage
SCM smartly leverages on technology to attain competitive advantage; whether it’s resolving labor-management issues, producing low-cost solution using mathematical computing techniques, providing logistics and other necessary data capture or employing real-time stock monitoring techniques to check stock losses, there’s a whole host of ways that technology is boosting SCM and its efficiency.
The relation here is simple, like any other process that technology combines with, integration of technology with SCM accelerates associative growth. If an industry uses SCM that efficiently leverages technology, the growth of that industry will be unprecedented and among several technical reasons, the one reason would be the elimination of the possibility of a substantial amount of human errors.
3. Sufficient Inventory Control
Inventory management is pivotal to SCM as it involves the overarching control of purchases for supply, purchases of customers, storage and maintenance of stock as well as the numbers of sales and successful deliveries. Free-flowing inventory control ensures a smooth demand and supply circuit.
Best supply chain management practices emphasize on balanced inventory control. Balancing an inventory (in any industry) is the key to meeting customer expectations and involves both, adequate unit availability, and reduced inventory levels to eliminate the uncertainty.
4. Customer Empowerment
One constant across all industries is that the customer is king. Business advancement has experienced an evolution from push supply chains to customer-centric pull oriented ones.
Supply chain management has modernized its ways to reach out to the customers in faster, customized, personalized, and most optimized ways. Two popular approaches involved are faster supply chains that capitalize on the time component and the agile supply chain that capitalize on meeting demands in terms of volume and variety. As long as the customers feel empowered and decisive, the industry can be assured of prolific growth.
5. Enhanced Communication
Finally, the step that makes or breaks every industrial sector, enhanced and free-flow of communication through networks and hierarchies are what sets the wheels turning in the right direction. Lack of effective communication causes multi-dimensional mismanagement, a hazard when it comes to a supply chain.
Supply Chain Management involves conscious, well-administered efforts to improve communication between entities, which not only avoids the aforementioned calamities but a lso augments the overall process to produce improved solutions and outcomes -- a prerequisite for the stability and success of an industry.
Besides these, other factors that pave the way for SCM to boost industrial growth are compatibility with globalization strategies, reliable top-level management, the flexibility of information systems, among others.
Growth Potential Of The Industry
From reducing operation costs, increasing customer satisfaction, advancing monitoring, and administrating supply chain processes to directly affecting market size, supply chain management in a true sense, empowers an industry. So much so, that the estimated CAGR of its growth is estimated to be 11.2%. From the $15.85 billion market size that was attributed to supply chain management, it is expected to grow up to $37.41billion by 2027.
And with this blog post, we just got you covered with the secrets of this growth. For any more topics that you would like discussions on, Contact to our Experts.