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Supply chain management refers to controlling the flow of goods and services and includes all processes that convert raw materials into end products. It involves actively streamlining a company’s supply-side activities to maximize customer value and achieve competitive advantage in the market.

How Supply Chain Management (SCM) Works?

Supply chain management (SCM) is the attempt by suppliers to develop and implement supply chains that are as efficient and economical as possible. Supply chains include everything from manufacturing to product development to the information systems required to run these businesses.

Typically, SCM attempts to centrally control or link a product’s production, shipping and distribution. By managing the supply chain, companies can reduce excess costs and deliver products to consumers faster. It is done through tighter control of the company’s internal inventory, production, distribution, sales and supplier inventories.

SCM is based on the idea that almost all products that come to market result from the efforts of multiple organizations that make up a supply chain. Although supply chains have been around for a long time, most companies have only recently started paying attention to them as an added value to their operations.

What is an Example of Supply Chain Management?

Supply chain management coordinates the activities required to produce and deliver goods and services to a company’s customers. Examples of supply chain activities may include design, cultivation, manufacturing, packaging, or transportation.

Why is Supply Chain Management Important?

Supply chain management is important because it can help achieve various business goals. For example, controlling manufacturing processes can improve product quality and reduce the risk of recalls and lawsuits while helping to build a strong consumer brand.

At the same time, controls over shipping processes can improve customer service by avoiding costly shortages or periods of overstocking. Overall, supply chain management offers several opportunities for companies to improve their profit margins and is particularly important for companies with large international companies.

How are Ethics and Supply Chain Management Related?

Ethics has become an increasingly important aspect of supply chain management, giving birth to principles called supply chain ethics. Consumers and investors invest in how companies make their products, treat workers, and protect the environment. In response, companies are reducing waste, improving working conditions, and reducing their environmental impact.

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