Supply Chain Management: Beyond logistics
By: Juan Carlos González
Increasingly, supply chain management – or supply chain management (SCM) – is recognized as one of the most central elements in the generation of value in an organization. But what exactly is supply chain management and how is it different from purely logistics management?
If we stop to analyze a typical company in Latin America, we would say that its logistics area is in charge of planning and managing the purchases and storage of raw material inventories, products in process and finished products, as well as everything related to the flow of said products. inventories, from the point of origin to the point of consumption, according to the needs of the client. But supply chain management has a broader scope. As the authors of the book Supply Chain Logistics Management, who themselves are professors at Michigan State University, point out, this discipline involves “collaboration across businesses” to connect suppliers, customers, and other stakeholders as a means of driving efficiencies and producing value for the final consumer. The textbook considers supply chain management activities as strategic decisions and establishes “the operational framework (or framework) within which logistics is performed.” That is, according to this concept, logistics is a part of SCM.
While many have recognized the benefits of a process-based approach to managing the business and supply chain, most are sketchy ideas of what to consider, focusing only on the macro processes leaving important questions aside. such as which threads and activities are contained in each process, and how those elements interact with each other, as well as the roles and responsibilities of the people involved; and finally the indicators with which this whole scheme should be monitored. By not having this detail, the successful implementation of an SCM area becomes very challenging.
The global dialogue forum on the security and management of global supply chains (part of the International Labor Organization (*)) has identified eight key processes that constitute the backbone of this discipline:
- Customer relationship management
- Demand management
- Order fulfillment
- Manufacturing Flow Management
- Supplier relationship management
- Product development and marketing
- Returns
- Post-sale management (customer service)
The proper management of SCM and the eight processes mentioned above, as well as the associated sub-processes, point to the main objective, which is to provide the maximum value to the customer, optimizing the cost-benefit ratio throughout the supply chain, thus impacting decisively the finances of the company. With this it is achieved:
- Optimize working capital
- Release cash flow
- Optimize financing costs
- Reduce opportunity costs
- Increase operational efficiency
- Reduce obsolescence and inventory costs
In conclusion, SCM management is the integration of key business processes, starting from the final consumer and going back to the providers of goods, services and information that generate added value for customers, the business community of a country and shareholders. of related companies.
(*) www.oit.org