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Supply Chain Management Definition, Advantages and Disadvantages

Definition of Supply Chain Management

Supply Chain management can be considered as an effective tool for improving business process. It starts with the source of supply and competes at the point of consumption. Supply chain management is a flow of information and materials from suppliers which involves number of value added process and different distribution channels to the customers. 

Supply chain management involves :

  • Customer
  • Producer
  • Suppliers

Supply Chain management includes inventory managment, supplier managment, Goods receipt and warehouse managment, customer requirement processing and purchase order processing.

Supply Chain Management Advantages :

  1. It improves relationship between suppliers as well as buyers.
  2. SCM reduces cost throughout the supply chain process.
  3. SCM also gives competitive advantages by earning loyalty of employee, customers and shareholders.
  4. It also enables the streamlining of the supply chain.
  5. Supply chain management mantains balance between service and cost.
  6. Customer services improces by enabling supply chain management.
  7. It becomes easy to estimate or forecast the demand and supply of services as well as goods using supply chain management.
  8. SCM helps in sharing information of sales-related different between parties
  9. Using SCM marketers can respond to their customers easily and effectively.

Supply Chain Management Disadvantages :

  1. One of the biggest disadvantages of Supply chain management is, it requres heavy investment of money, time and varous resources to imprement SCM
  2. It becomes difficult to decide whether to outsource or not.
  3. Choosing correct suppliers by integrating supply chain is very difficult.