Supply Chain Management: What is, Role of Logistics, Main Components And Its Benefit

Supply chain management is essential to a company's success. Developing a concept into a finished product is complex and involves many moving elements, and increased sales are directly proportional to how successfully a corporation handles this process. I'll go over supply chain management, the Role of logistics in  Supply Chain Management Estimation, SCM Components, and its benefits in this blog. 

What is Supply chain management?

Managing how goods and services progress from concept to raw materials to a finished consumer product is known as supply chain management. Retailers use supply chain management to keep track of product quality, inventory levels, timeliness, and costs. Shipping, warehousing, courier services, road/rail transportation, and air freight all fall under logistics. As consumer preferences shift toward digital purchases delivered directly to the customer, the most prominent retailers will become more involved in supply-chain management and logistics. 

 Role of Logistics in Supply Chain Management Estimation

The worldwide logistics business in supply chain management is estimated to be worth $4.96 trillion to $9.30 trillion in 2019. Moving and warehousing commodities worldwide account for somewhere between 5.6% and 10.6% of global GDP. 

Main Supply Chain Management Components:-

1). Controlling and planning: When it comes to operations planning and control, some operations managers make the error of reducing raw material and component inventory levels without considering the impact on the manufacturer's process and overall capacity.

 

2). Storage: Goods are primarily stored in large warehouses located in industrial regions. Loading and unloading facilities are available. These storage services help optimize the supply chain offered by international freight forwarding, and they allow things to be stored until a full container load is ready for shipment. Large amounts of products like wine and cheese that need to mature and ripen before reaching customers can be stored in the warehouses.

3). Reverse logistics: The administration of returned goods is known as reverse logistics. A reverse logistics activity occurs every time money is removed from the company's reserve. It entails coordinating the return of merchandise from the store to the warehouse and their destruction or return to the supplier for a refund or replacement. The supply chain includes reverse logistics as well.

4). The new model for supply chains: The following are the basic concepts of the new model, which is gaining traction around the world:

a). The end client is the only entity that puts money into the supply chain.

b). The only long-term solution is to determine which parts of the supply chain, from raw materials to end-customer delivery, are profitable.

c). Aside from the monetary value, the total content of the goods is taken into account.

 

Despite the emergence of cutting-edge technologies like tracking systems, mobile apps, and sensors, physical forwarding and distribution of products remain the foundations of supply chain management.

Benefits:-

i). Flexibility: Companies can conduct business more rapidly and smoothly with an integrated supply chain, and a company's costs and space efficiency benefit from just-in-time capability. However, if the supply chain isn't efficient or responsive enough, this strategy can be counterproductive.

ii). Waste should be eliminated: Integrating your supply chain can help you save money in several ways. This will help you accomplish your low-waste environmental goals by reducing emissions, and you'll be more productive and save money as a result of it.

iii). Savings: Lowering costs requires flexibility and the elimination of waste. Having a committed, well-informed workforce will boost productivity and streamline processes. Instead of working alone, cost-sharing can be accomplished through the use of Supply Chain Management services.