What Elements Make up Supply Chain Management?

What Elements Make up Supply Chain Management?

When companies sell goods to customers, a supply chain is involved that impacts all aspects of the business. Many people believe that supply chain management is nothing more than supplier management. While this is indeed a big part of the job, there is actually a lot more to it than that.

Supplier management entails negotiating the costs of goods, audits and management, developing new products, and managing on-time deliveries. Certain metrics will be measured, especially on-time delivery, to look for ways to increase efficiency.

Logistics

While logistics and supply chains go hand in hand, they are not one and the same. Logistics entails managing the movement of goods specifically. It involves managing shipping companies, freight forwarders, customers brokers, parcel delivery firms, and third-party logistics providers.

Much like the management of suppliers, the costs and contracts of logistics providers can and should be negotiated. After all, warehousing and shipping costs can be one of the biggest expenses in a supply chain.

Inventory

Inventory tends to be one of a supply chain’s biggest expenses. Unlike paying for logistics, you pay for the inventory well ahead of receiving the benefit of the product. That’s why inventory management is so essential; you need goods to sell to customers but have to spend money in order to get them. You need enough to meet demand, but you don’t want to have more than you need because the financial outlay is so great. In some cases, you might even end up with way more than you need if you overestimate how well a product will sell. Getting this right can make all the difference to your success.

Lots of components go into proper supply chain management, but it all comes down to delivering the items your customers want at the times they want them while spending the least amount of money possible. Learn how to best manage your inventory.

This blog post was based off of an article from The Balance. View the original here.