All of us must have visited big stores in supermarkets at some point of time to buy different like grocery, cosmetics, home decoration items, electronic gadgets and ready made garments, etc. We must be wondering how all these stores are able to supply us the right quantity of products desired by us at competitive prices. Are they making it themselves or buying it from other manufacturer? If they are making it themselves then who is supplying them the raw materials, where goods are being produced, how are they transported to the supermarket and then delivered to us. If they are buying it from some other manufacturer, the question remains the same about procurement of raw material, converting it into finishes goods, storing them in warehouses and transporting them to place of actual consumption, which is the supermarket.
Supermarkets deal in many goods hence there may be huge numbers of suppliers situated at various levels from local to national to international level. Along with goods, money and information also travels amongst ultimate suppliers to ultimate buyers. The information may relate to level of inventory, demand, type, specification of goods and time when they are required. So, we can say that there are multiple participants, processes and activities that come together to complete the whole chain of supply. This process is broadly known as supply chain management.
Supply chain management coordinates the efforts of all the participants, which is suppliers, manufacturers, distributors, dealers and customers to meet expectations and demands of end customers. The main objective of supply chain management is to ensure continuous flow of information amongst the participants. It ensures coordination and harmonization of their activities to deliver the right products at the right places at the right times for the right value. The goal is to enable all of the to function as one unit, to achieve customer satisfaction.
Proper supply chain management ensures that goods are available to customers at competitive prices. It also ensures right quantity, right quality, right location, right time and right prices for the customer. It does not only comprise of the traditional functions of any business such as purchase, inventory management, transportation or logistics, distribution but the activities such as new product development, production or engineering, finance, packaging, marketing and customer service activities have also emerged as focus area of supply chain management recently.
It is a complete chin of activities, participants and components that make together the whole process of the supply chain management.