7 Principles Of Supply Chain Management

According to the Institute of Supply Management Inc., supply chain management defined as the design and management of seamless, value-added process across organizational boundaries to meet the real needs of the end customer. Besides that, supply chain management also can define as managing supply and demand, sourcing raw materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order management, distribution across all channels and delivery to the customer. According to the Council of Supply Chain Management Professional, the other definition of supply chain management is the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities.

The first principle is segment customers based on the services needs of distinct groups and adapt the supply chain to serve customer needs profitably. Both business people and supply chain professionals are trained to focus on the customer’s needs. In order to understand customer better, we can divide the customers into a different group which is segmentation. The most primitive way to segment customer is ABC analysis that groups that groups the customer based on the sales volume or profitability (Ross, 2013). Segmentation can also be done by product, industry and trade channel. The second principles is customize logistics network to the service requirements and profitability of customer segments. His is where by the business is made to tailor different logistics network to serve different segment (Fawcett, Ellram nd Ogden, 2014). The third principle is align demand planning accordingly across the supply chain ensuring the consistent forecasts and optimal resource allocation. Supply chain experts are taught to share the demand data with trading partners so nobody has to keep the unnecessary stock. The fourth principle is differentiate product closer to the customer and amass them when customer places an order. The fifth principle is manage sources of supply strategically to reduce outsource. The sixth principle is develop a supply chain wide technology strategy that supports multiple levels of decision making and

Boosts customer service is important for supply chain management to impacts the customer service by making sure the right product assortment and quantity are delivered in a timely fashion. Additionally, those products must be available in the location that customers expect. Besides that, improves financial position will increases profit leverage. Firm value supply chain management because it helps control and reduce supply chain costs. This can result in dramatic increases in firm profits. It also will decrease fixed assets used by the company. The importance of supply chain management can reduce operating cost. Retailers are depend on supply chains to quickly deliver expensive products to avoid holding costly inventories in stores any longer than necessary. Manufacturers depend on supply chains to reliably deliver materials to assembly plants to avoid material shortages that would shut down production. Supply chain management leads to reduced supply chain cost to manufactures, supplier and the consumer. Other than that, ensure human survival is depends on the supply chain to provide necessities. The supply chain also helps in supply of medicines and healthcare which leads to improve human care. Supply chain can improves human life and the standard of living. The foundation of