What is Supply Chain: Explained

May 23, 2024
Updated on

The supply chain distribution process is how businesses move their products and services from suppliers to customers. Distribution plans are heavily influenced by the company’s business objectives. 

Now, what is the supply chain? There are numerous definitions of supply chain distribution, some of which overlap with one another. One common definition of distribution is the process of making goods available to consumers or other user businesses by moving them from the manufacturer or distributor as needed. Other broader definitions consider it a method of transferring goods from supplier to manufacturer to wholesaler or retailer to the end consumer or user.

What is the Significance of Supply Chain Management (SCM)?

Now that you know what a supply chain is, you also need to know why it’s given so much importance. An efficient, optimized supply chain is critical to a company’s ability to fulfill its customers’ orders. If you manage the supply chain well, it can result in significantly lower costs and a shorter production cycle. When it comes to supply chain operations, supply chain management (SCM) is an umbrella term that covers product development, sourcing, production, procurement, logistics, and more. Without effective SCM, businesses risk losing customers and losing a competitive edge in their respective industries.

However, SCM is about more than just creating the most efficient process; it’s also about mitigating risks and ensuring everything runs smoothly. This is due to the fact that the supply chain consists of numerous components, ranging from manufacturing sites and warehouses to transportation, inventory management, and order fulfilment.

Each step in this process carries a plethora of risks and possibilities that can  derail an entire order. Minimizing delays, optimizing the time of day that goods are moved, the length of time inventory is held, and the order dispatch process are all factors that can have a significant impact on the operation. Without an optimized supply chain management process in place, the chain may fail at any point.

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Supply Chain Best Practices for Small Businesses

It can be difficult to achieve success as a business owner in a rapidly expanding global market. An optimized, end-to-end connected supply chain can propel your company forward in the competitive ecosystem. So, after knowing all about what is supply chain, you also need to find out what the best practices are to streamline the process:  

Real-time supply chain planning

Real-time, connected supply chain planning can help ensure your company isn’t planning based only on historical data. When using historical data, it can be very difficult to overcome any unforeseen circumstances that cause disruptions. When real-time planning is in place, scenarios can be handled much more efficiently.

Maintaining strong supplier relationships

Supplier relationships are critical to the success of your supply chain. These connections necessitate ongoing upkeep and two-way communication between the buyer and seller. To ensure continued success of your relationships, you should have a specific, optimized platform in place for conflict resolution.

Align your strategy

A supply chain council can assist you with this. If the SCM strategy is not aligned with the company’s strategies, it will not perform to its full potential. A coordinated, efficient supply chain strategy that is aligned with the organization’s overall operations can reduce operational costs, improve supply chain quality, and reduce errors while streamlining procurement.

Challenges Faced by MSMEs in Supply Chain Management

Today the distribution chain is experiencing unprecedented disruptions, presenting both challenges and opportunities for all parties involved in the supply and distribution system. MSMEs face an even greater challenge as these changes necessitate rapid initiatives to embrace digital and business transformations. The entry of new players into their segment, particularly large enterprises with deep pockets, poses a threat to MSMEs.

Thus, the current environment compels MSMEs to reconsider the physical logistics of moving inventory along a distribution chain, how goods are moved, where inventory is stored, and how to identify your customers and their needs to keep them loyal to you. Businesses, particularly MSMEs, must take a more professional approach to operations management in order to survive and grow!

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