The 5 Components of Supply Chain Management

15 Dec 2022 Logistics

Supply chains are complex entities that include various organizations, people, information, products, and resources that move a product from one point to another until it has been successfully delivered to a customer or consumer. Due to the complexity of supply chains, managing them can be a large expense for businesses of all sizes. As a leading provider of comprehensive international freight shipping solutions, the team at C&D Logistics knows how time-consuming and labour-intensive supply chain management can be. That is why we have provided a list of the 5 components of supply chain management to help you understand every step involved with the process and determine if it is a task that you should handle on your own or outsource to a professional.

Learn about 3 crucial considerations for international freight shipping.

What is Supply Chain Management?

Before discussing the components of supply chain management, it is important to understand what this process refers to. Supply chain management (SCM) involves the management of the flow of goods and services from raw materials to the delivery of a finished product to a consumer. Effective supply chain management involves streamlining various processes to maximize customer value and reduce production costs.

A supply chain manager should work to develop and implement supply chains from product development and production to delivery and potential returns in the most productive and cost-effective manner possible. Supply chain management works to link the production, shipment, and distribution of a product to help cut down on excess costs and to deliver products to consumers faster. This is achieved by maintaining control of internal inventories, internal production, distribution, sales, and the inventories of vendors.

5 Components of Supply Chain Management

The 5 components of supply chain management include:

1. Planning

Companies must properly plan and manage all resources to ensure that customer demand for their products or services are being met. This can be achieved through careful planning to determine which technology should be used, ensuring that the supply chain remains efficient and effective.

2. Sourcing

Every business needs to select a supplier or multiple suppliers to provide the goods and services needed to create their products. After selecting suppliers, the supply chain manager will then need to monitor and manage supplier relationships. This includes ordering, receiving, managing inventory, and authorizing supplier payments.

3. Producing

Supply chain managers must coordinate the activities required to order raw materials, accept them, manufacture them into finished products, test products for quality, package products for shipping, and schedule each shipment for delivery.

4. Delivering

Logistics and supply chain management are closely interlinked. Coordinating orders, picking, packing, scheduling deliveries, invoicing, dispatching, notifying relevant parties, and receiving payments are all crucial parts of the delivery process. Even with third-party courier systems in place, every single exchange along the way must be carefully monitored to ensure there are no errors as a single mistake can cause a significant delay.

5. Returning

As part of supply chain management, businesses must develop a process that makes returning products easier and faster. This includes a process for accepting customer returns and determining if the product should be reproduced, repaired, scrapped, or returned to the shelf.

To learn more about our international freight shipping solutions and supply chain management, or to discuss the details of your shipment, get in touch with the team at C&D Logistics. We can be reached through our online contact form and will be happy to answer any questions you may have regarding our services.