Importance of supply chain management


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Today most of the global companies are forced to keep looking for a production center where cost of labor and raw material is cheap and in order to compete in the global market and networked economy, SCM is very helpful for organizations.

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Importance of supply chain management

  1. 1. Importance of Supply Chain Managementhttp://www.interrait.comBefore knowing importance of Supply Chain Management, there is need to understand what actuallySCM is? Supply chain management is the systematic and the strategic coordination management forsupplying goods and products required by the end customer. Or we can say that a practice of productsthat reaches to an end user and represents the efforts of the organization is known as supply chainmanagement. It represents a conscious effort by the supply chain firms to develop and run supply chainsin most effective and efficient ways possible.Supply chain management activities cover almost everything such as from products to its development,sourcing, logistics and even information system also. The main objective of SCM is creating net value,building a competitive infrastructure, synchronize the goods supply, measures the performance globallyand leveraging worldwide logistics etc.Today most of the global companies are forced to keep looking for a production center where cost oflabor and raw material is cheap and in order to compete in the global market and networked economy,SCM is very helpful for organizations. Various activities are there in an organization which needsstrategic management like sourcing of raw materials from different place and then from differentlocations these finished goods are passed through different chains of distribution network whichincludes retailers, distributors and end customers.Importance of SCMSCM plays a vital role in organization activities and an essential element to operational efficiency whichcan be applied to customer satisfaction and company’s success. You can say that it is just like thebackbone of an organization which manages the critical issues of the business organization such as rapidgrowth of multinational corporations, global expansion and environmental concerns which indirectly ordramatically affects the corporate strategy.Other benefits and importance of supply chain management are: Reduces inventory costs Provides better medium for information sharing between partners Improves customer satisfaction as well as service Maintains better trust between partners Provides efficient manufacturing strategy Improve process integration Improves bottom line (by decreasing the use of fixed assets in the supply chain) Increase cash flow Improves quality and gives higher profit margin
  2. 2. SCM offers various tools and techniques that help business organization to diagnose the problems andalso provide solutions of these disruptions around the business environment. It plays an important rolein moving goods more quickly to their destinations. The most important thing in today’s business ismanaging competition among partners and in order to win this competition SCM helps businessorganization in a very efficient manner. All the benefits and importance of SCM makes its future sobright and because of emerging trends in organization SCM becomes the most critical business disciplinein the world today.InterraITs Supply Chain Management companies is an integrated end-to-end legacy ApplicationModernization. It streamlines and mobilizes manual business processes making real time informationavailable at the click of a button.