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A good Supply Chain Management Strategy is responsible for ensuring the execution of your business operations right from the point of conception to the final consumer. In our article about Supply Chain Management for SMEs (insert hyperlink), we discussed the importance of supply chain management to small and medium-sized enterprises. There, we considered the definition of Supply Chain Management (SCM), its cycle, and its various components.
In this article, we will consider the prerequisites of Supply Chain Management (SCM) to SMEs and what you must do. Also, you will discover what supplier chain managers look for when managing supplier relationships. Such information will help influence your decisions on adapting a great SCM strategy for your business. But first, let us delve into what a great SCM strategy needs.
What your SME requires for a great Supply Chain Management
Every business has its stepping stones and a foundation. They are key processes in play that ensure the effective running of a business. Regardless of the supply chain being used by your business, these points must be upheld.
- Customer Service and Relationship Management: In your small or medium-sized business, the way you relate with customers is vital. Your business theme should be about your customers. It has to be appealing to their minds to draw them to your business. Without customers, there is no point in producing. You need CRM tools to gather customer information to provide better products and services. You also need customers to give feedback, either negative or positive.
- Supplier Relationship Management: As one who manages a small or medium-sized business, you must maintain a good relationship with your clients. If you want your production to be timely and within budget, you need to relate well with those whom you work with. A strong bond with your workers impacts the manufacturing flow management. With such an impact, your products arrive at their destination in time and undamaged.
- Demand management: Produce as customers demand. When there is low demand, produce in small quantities and vice versa.
- Product Management: Endeavor to expand your business and stop producing unsatisfactory goods. For this, you might need the help of another supplier.
- Fulfillment of orders: Put measures in place to get your products to your customers.
- Reverse Supply Chain: It is also known as “Returns Management’. It involves picking up faulty goods and offering refunds.
Variants of Supply Chain Management
Now we know the processes needed to effect a supply chain management strategy, here are its variants. The four variants of supply chain management include:
- Global SCM
When global production and SCM come together, it yields profit. Although, this incurs taxes and tariffs as goods have to move internationally.
- SAP (Software, Application, Products) SCM
SAP is a software company that incorporates enterprise resource planning and logistics. It creates an automated means with which you can carry out supply chain networking, planning, execution, and production. It also supports demand planning and business forecasting.
- Logistics and SCM
- Purchasing and SCM
What Supply Chain Managers look for when managing Supplier relationships
Every supply chain manager looks out for certain guides in ensuring the management process proceeds smoothly. The importance of supplier relationships cannot be overemphasized, hence the need to seeks ways to improve such relationships. Here are some points that SC managers look for in maintaining these relationships.
- Leadership and ORG charts
In the SCM, you need to ensure your business is long-lasting and not prone to change. You need to know those who work for you. As an owner of a small or medium-sized business, you must identify with your staff. Business relationships usually exist between people. Relationships like this cannot withstand restructuring.
- Management Style
As an SCM leader, you need to make sure your crew is one with whom you can work. You also must avoid relating in ways that reduce productivity. Your management style should ensure that all your workers are in positions where they would work more effectively.
- Company Culture
You need to observe how your crew acts when they feel no one is watching. Their behavior can help you determine if they will make for great work partners.
- Information Flow
You must be up-to-date with your inventory, product details, and SKU organization. Gathering such information would be a waste if you cannot produce them when necessary.
- Product Flow
Ensure your crew is one that can work under emergencies. They should be ready for changes in the orders you make. If there is a change, they should be able to adapt. Their inventories should be helpful to you at any time of the month. These factors will determine how fast you can produce and market your goods.
- Risks and Rewards
Consider all the risks and rewards of working with your crew.
If you ensure all of this, your crew will become one with whom you can work. With a good SCM crew, you have a successful small or medium-sized business on the way.
Other Concepts in Supply Chain Management
In using SCM for your small or medium-sized business, you need to note some terms. They include:
Border Adjustment Tax: Border adjustment tax is the tax on imported goods in the Global SCM. It is also known as destination-based Cash Flow Tax (DBCFT).
Integrated SCM: In the integrated SCM, all looks are tightly bound. All those involved in the integrated SCM function as one and not a random set of marketers.
Financial Flow: The financial Flow of your SME refers to factors that determine the profit of your business. You should consider factors like goods sold on credit, accounts receivable and payable, and payment schedule.
Lean Six Sigma: It helps you avoid factory mistakes in your business. With the lean Six Sigma, you discover defects earlier. It minimizes waste and production time by standardization.
S&OP: This increases sales. It does this by arranging its constituent parts to focus the organization only on sales improving operations.
Current Challenges in the Supply Chain Management
These are some of the challenges facing SCM. They include:
- SECH ratings- A way of if ensuring business sustainability using economic, social, and environmental factors.
- The Dodd-Frank decision makes the supply chain management a bit complex.
- Actions of NGOs encourage consumers to look towards local businesses.
- SEC regulations- Business owners need to keep their audits properly. In cases where they do not, they pay fines to the Securities and Exchange Commission.
What you need to do
Here are some outlined steps to follow in adopting a great supply chain management strategy. They include:
- Adapting your goals with the needs of your target customers.
- For each segment you plan to reach, create a logistics network.
- Plot the demand for products in your niche against the rate of supply.
- Find the product closest to your customers.
- Strategically outsource
- Source for an information technology that aids multi-level decision-making.
- Obtain service and financial metrics for your business.
- You need to think globally to function locally.
The supply chain management is of great importance to small or medium-sized enterprises. Note that for a successful supply chain management, you need a functional crew. The stepping stones of SCM are just as important. There are some principles behind SCM that you need to follow in your business. Although the supply chain is currently facing some challenges, it still fulfills its part towards SMEs. Applying the above mentioned to your business will help you benefit from the importance of supply chain management to SME.