Optimization of Supply Chain Management System

Optimization of supply chain management system

Supply chain management is a means of value creation for enterprises, and has an important impact on enterprise performance. So, how to optimize the supply chain management system, let's take a look!

I. Overview of Supply Chain Management

Supply chain, in fact, is a logistics network consisting of suppliers, manufacturers, warehouses, distribution centers, and channel providers. The same enterprise may constitute different nodes of this network, but more often than not, different enterprises constitute different nodes of this network. In the supply chain with more detailed division of labor and higher professional requirements, different nodes are basically composed of different enterprises. The flow of raw materials, work-in-process inventory, and finished goods among the members of the supply chain constitutes the flow of goods in the supply chain.

Supply chain management (SCM) is an integrated management idea and methodology, which performs the functions of planning and controlling the logistics in the supply chain from suppliers to end users. From the perspective of a single enterprise, it refers to the enterprise to improve the relationship between upstream and downstream supply chain, integrate and optimize the information flow, logistics and capital flow in the supply chain in order to obtain the competitive advantage of the enterprise. Supply chain management is the effectiveness management of the enterprise, which shows the optimization of the whole operation process of the enterprise in strategy and tactics. It integrates and optimizes the business efficiency of suppliers, manufacturers, and retailers, so that goods are produced and sold in the right quantity, at the right quality, in the right place, at the right time, and at the best cost.

Therefore, a complete supply chain should include suppliers (raw material suppliers or parts suppliers), manufacturers (processing plants or assembly plants), distributors (agents or wholesalers), retailers (hypermarkets, department stores, supermarkets, specialty stores, convenience stores and grocery stores), and consumers. In recent years, with the emergence of global manufacturing, supply chain management has been commonly used in business operations and has become a new management style. Supply chain management has become a hot topic in the industry due to the current fierce competition in the international market, the increase in uncertainties such as customer demand, and the rapid development of technology. Supply chain management is able to revise and strengthen the content of the plan with the development and changes until the last moment of the plan execution. Therefore, supply chain management can provide further effective decision support information, enabling organizations to assess the ``impact'' of supply chain links, events, and changes in customer demand.

The Importance of Supply Chain Management

The main goals of supply chain management are to enable customers to get the right product in the right place at the least cost, to minimize inventory but still provide excellent service to customers, and to shorten the product lifecycle in order to adapt to rapid changes in the environment.

Applying supply chain management can bring very real benefits to an organization, and many companies have seen their businesses grow significantly after implementing supply chain strategies. With the accelerated competition in the industry, shorter product cycles, and the impact of information technology, the importance of supply chain management is becoming more and more obvious. Facing the fierce market competition, enterprises are likely to face the fate of being eliminated by the times if they do not adopt the fast process method. So it needs an effective management approach to solve the problems on time and elastic change. The United States is the first country to propose supply chain management, enterprises note that in addition to reducing manufacturing costs, it is also necessary to enhance the development capacity in order to promote the growth of enterprises. In terms of transportation, warehousing and distribution, it is necessary to combine various manufacturers and customers to form a rapid production business process and a management style to cope with the information age. Therefore, supply chain management can create value for consumers, manufacturers, suppliers, etc. It will enable consumers to receive goods in a timely manner within a specified period of time; for manufacturers can minimize the loss of sales due to product inventory shortages caused by the minimization of inventory and related costs, and enable the manufacturer to provide customers and distributors with the best level of service; it is more able to improve the satisfaction of the supplier, so that it is better with the manufacturer's It also improves supplier satisfaction by better aligning the logistics cycle with the manufacturer's to avoid overstocking or shortages, reduce raw material obsolescence, and provide a higher level of service and higher returns to the manufacturer.

Now, more and more enterprises pay attention to the importance of supply chain management, and gradually increase the pace of supply chain management spending year by year. On the one hand, the development of information technology for supply chain management provides a powerful communication and optimization tools; on the other hand, many large enterprises, well-known companies in the enterprise practice confirmed the value of supply chain management, and thus the development of other companies competing to follow the situation. Especially in the current domestic economic development atmosphere, the rules of the game change, more and more strengthen the importance of supply chain management.

Three, the optimization of the supply chain management system

Supply chain management is a means of value creation for enterprises. The purpose of supply chain management is to maximize the value of the entire supply and demand system. The value of the supply chain is closely related to profitability, and the higher the profitability, the more successful the supply chain management. As a matter of fact, all the flows of information, goods and money in a supply chain incur costs, therefore, effective management of these flow elements is the key to the success of supply chain management. Supply chain management is essentially about maximizing value through the management of information, commodity and capital flows between nodes in the supply chain.

Supply chain management is closely related to the main business of an enterprise, optimizing its business and creating value. According to relevant surveys, for enterprises that have never implemented supply chain management, if the implementation of supply chain management can bring about 20% cost savings. Along with cost savings, a company's supply chain management capabilities have brought a variety of economic benefits to the company, including traditional supply chain functions such as inventory control, purchasing, and order fulfillment on the one hand, and company-wide efficiencies and cost savings on the other. The proper implementation of supply chain management is even more important in the strategic activities of the entire company, ranging from the product sales and design departments to the finance department. The success of supply chain management is based on the fact that it must be implemented between companies, because optimizing the entire supply chain requires information*** sharing and collaboration between companies. There are various ways to optimize the supply chain, and in order to achieve the main operational objectives, active measures should be taken to ensure that supply chain management plays an important role.

(a) the implementation of a new business management model

The implementation of a new business management model, including enterprise management to achieve the change from functional management to business process-oriented management, focusing on the overall process of the optimal system of thought, the establishment of a flat organization, give full play to the role of each person in the overall business process, customer-oriented and supplier integration of business processes, the use of IT technology Coordinate the contradiction between business decentralization and management centralization. The implementation of the new enterprise management model can help enterprises in the right time, the right place, at the lowest cost to provide the right amount of qualified raw materials, components and products. This is a "*** win" situation - suppliers, producers, sellers, customers and so on can make the information flow quickly and accurately, so that all parties to maximize the benefits. After the implementation of the new business management model, enterprises can improve the overall business decision-making level, so that enterprises can grasp the opportunity in the fierce market competition.

(ii) the establishment of strategic partnerships

In supply chain management, not only is there a win-win concept, it is more important to implement the conceptual form into operational practice through technical means. The key is to integrate the internal supply chain with external suppliers and users to form an integrated supply chain. The establishment of good partnership with major suppliers and users, the so-called supply chain partnership, is the key to integrated supply chain management. At this stage, enterprises should pay special attention to strategic partnership management, which focuses on replacing product-oriented with supplier- and user-oriented, increasing contact with major suppliers and users, improving mutual understanding, maintaining certain consistency among each other, and realizing information **** enjoyment. Enterprises should profit from providing users with products and services that are different from those of their competitors or value-added information.

(C) effectively reduce the cost of business operations

In the market economy situation, the price of the product is determined by the market, by the consumer, rather than by the commodity manufacturers and suppliers, but in the process of business operations costs are controllable, the profit arises from the difference between the price and the cost, so the enterprise would like to increase profits, can only be to reduce the cost, and can not rely on raising prices. It is possible to rely on raising prices. Enterprises want to reduce costs can be controlled through the production process, raw materials, transportation and so on.

(D) appropriate and timely reduction of capital investment

Enterprise operations should minimize the input capital, centralized inventory, reduce inventory. Enterprises that can produce quickly according to market demand, reasonable sales, with a very low inventory, for the enterprise can make the sales strategy is stable, to maintain a better brand image, so that the enterprise to obtain long-term income. If the enterprise through a large number of inventory to meet market demand, not only occupy a large amount of operating capital, but also make the enterprise to bear a certain market sales risk, perhaps a large number of inventory will bring the goods stagnation.

(E) Reasonable increase in revenue

Enterprises to increase revenue, can be improved through the development of plans to reduce inventory shortages, shorten the delivery time to improve the level of service and other ways to obtain. In particular, supply chain management can enable enterprises to improve service and reduce inventory levels of these two goals at the same time. Through the implementation of supply chain management, enterprises can greatly shorten the time to meet the needs of consumers, and then enhance the effective enhancement and improvement of service levels, through the change of time management, to quickly meet the needs of consumers, to gain a competitive advantage in the market.

Enterprises can gain multiple benefits by implementing supply chain management. According to some studies, after the implementation of supply chain management, the total supply chain management costs within the enterprise (as a percentage of revenue) reduced by more than 10%, the on-time delivery rate of medium-sized enterprises increased by 15%, accordingly, this type of enterprise productivity increased by more than 10%, for the average enterprise to meet the order to shorten the lead time of 25-35%, if for the performance of the large-scale enterprises whose assets to operate the performance of the increase of 15-20%, the inventory of medium-sized enterprises to improve the performance. 20%, a 3% reduction in inventory for medium-sized companies, a 15% reduction in inventory for large, well-performing companies, and a 40-65 day advantage in cash flow turnover over the average company.

The severe competition between enterprises has accelerated the competition between supply chains, who can deliver customized products to customers at the fastest speed and lowest cost, and who can win the market. Especially for an enterprise which includes the procurement of raw materials, parts and equipment, manufacturing and assembly, packaging and temporary storage of products, transportation and distribution, distribution and sales as well as the final delivery of users and after-sales service, etc., the role of supply chain management for the enterprise to enhance the overall competitiveness of the role of the company is self-evident. Supply chain management, as a new management model, provides value to users and shareholders from the provision of products, services and information, and is able to excellently manage all business processes from raw material suppliers to end-users in key business processes. With the competition between enterprises gradually transformed into the competition between supply chain management, perfect and reflect the rapid enterprise supply chain system will be the dominant factor in determining the future fate of enterprises.

Famous enterprises such as Lenovo, Haier, etc. in the supply chain management practices in the great achievements, a strong proof of the supply chain management is the current form of global economic integration, to adapt to the market competition in an effective way. With the continuous development of supply chain management, supply chain management will more and more show the impact on enterprise performance. Effective supply chain management will not only bring changes in efficiency and effectiveness to enterprises, but also form the core competitive advantages of enterprises, improve the response speed of enterprises to customer service, effectively enhance customer satisfaction, and enhance the ability of enterprises to identify changes in market demand, as well as to respond to market sensitivity, etc. Therefore, actively optimizing supply chain management will make the enterprises more and more competitive. Therefore, the active optimization of supply chain management, so that enterprises continue to improve and develop, and ultimately can effectively improve the overall competitiveness of enterprises.