HomeBlogSupply Chain Management Functions
Supply Chain Management

Supply Chain Management Functions

20 May 2022
In this article, we explore the six key functions of supply chain management and provide examples of each.

Supply chain management (SCM) is coordinating and managing all the different parts of a supply chain to ensure that goods and services are delivered on time, to the right place, and in the right quantities.

What is supply chain management, and what are its essential functions?

  • Procurement: sourcing and selecting suppliers

  • Production: ensuring goods are produced efficiently and meet quality standards

  • Logistics: getting products to the right place at the right time

  • Sales and marketing: promoting and selling products/services

  • After-sales service: providing support to customers once they have bought a product/service

Each of these functions is essential to the smooth running of a business, and they all need to be coordinated and managed to ensure that the supply chain runs smoothly.

If you're thinking of studying Supply Chain Management or working in Supply Chain Management, then it's essential to understand all the different functions involved. So read on to learn more about each of the essential Supply Chain Management functions.

Procurement: sourcing and selecting suppliers

The procurement function is responsible for sourcing and selecting suppliers. This involves finding potential suppliers, assessing their suitability, negotiating terms and conditions, and awarding contracts.

The procurement function is essential because it ensures that businesses only work with suitable suppliers who can provide goods or services that meet their needs at a competitive price. A well-run procurement function can also help to build strong relationships with suppliers, which can lead to better quality goods and services and improved delivery times.

How to select the best supplier for your organization?

The best way to select a supplier is to use a structured procurement process. This usually involves the following steps:

Define your requirements: what goods or services do you need, and what are your critical performance criteria?

Before you can begin evaluating potential suppliers, you need to understand your requirements clearly. What goods or services do you need, and what are your critical performance criteria? Once you have a good grasp of your needs, you can narrow down your search for the right supplier. There are several factors to consider when making your selection, including price, quality, delivery times, and after-sales service. By defining your requirements upfront, you can be sure that you find a supplier that can meet your needs and help your business succeed.

Search for suppliers: identify potential suppliers who can meet your requirements.

It is essential to identify those who can meet your specific requirements when sourcing suppliers. You will need to consider several factors, such as manufacturing capabilities, quality control, delivery times, and price. Once you have compiled a list of potential suppliers, you can narrow down your choices by contacting each one and requesting quotes. During this process, it is also essential to ask questions and feel for the supplier's level of service and customer support. By taking the time to vet your suppliers thoroughly, you can be sure that you choose a partner who can help you meet your goals and grow your business.

Evaluate suppliers: assess each supplier against your criteria to shortlist the best ones.

Regardless of the industry, assessing and selecting suppliers is crucial for any business. The goal is to find suppliers that can provide high-quality goods or services at a reasonable price and who will be able to meet your company's needs in a timely and efficient manner. There are several factors that you'll need to take into account when evaluating suppliers. First, you'll need to consider the quality of the products or services they provide. It's also important to look at turnaround time, flexibility, and customer service. Once you've gathered this information, you'll be better positioned to make an informed decision about which supplier is right for your business.

Negotiate contracts: negotiate terms and conditions with your chosen supplier/s.

When it comes to negotiating contracts, it is essential to be clear about your objectives and to have a good understanding of the other party's position. Start by identifying the key terms and conditions that are most important to you, and then be prepared to compromise on other less critical issues. It is also important to remember that the other party is likely to be just as concerned about their interests as yours, so try to approach the negotiations in a cooperative rather than adversarial manner. If you can reach a fair and mutually beneficial agreement, then everyone will be happy with the outcome.

Award contract: award the contract to your chosen supplier/s.

Now that you've chosen your supplier, it's time to award the contract. This can be a formal or informal process, depending on the size and scope of the project. In most cases, you'll need to issue a purchase order to the supplier, outlining the terms of the agreement. Once the supplier accepts the purchase order, the contract is official. Make sure you keep a copy of the contract on file to refer back to it if there are any questions or issues that arise. Congratulations! You've just taken an important step toward completing your project.

Manage contract: manage the contract throughout its duration, and monitor supplier performance.

Managing a contract effectively requires regular monitoring of the supplier's performance. This allows the buyer to identify any issues or problems early on and take corrective action if necessary. It also allows the buyer to assess whether the supplier is meeting the contract terms and identify any areas where they may be falling short. Furthermore, monitoring supplier performance can help to improve the buyer's negotiating position when it comes time to renew the contract. By taking these steps, buyers can ensure that they get the best possible value for their money.

Factors to consider when making a final decision

  • Quality of products or services

  • Turnaround time

  • Flexibility

  • Customer service

  • Price

Production: ensuring goods are produced efficiently and meet quality standards.

The production function ensures that goods are produced efficiently and meet quality standards. This involves planning production, scheduling work, monitoring progress, and controlling costs.

The production function is essential because it ensures that businesses can produce goods or services quickly and cost-effectively. A well-run production function can also help to improve the quality of products and services and reduce waste.

Logistics: getting products to the right place at the right time

The logistics function is responsible for getting products to the right place at the right time. This involves planning and managing the transportation of goods and storage and distribution.

The logistics function is essential because it ensures that businesses can get their products or services to customers quickly and efficiently. A well-run logistics function can also help to reduce costs, improve customer service, and reduce waste.

Sales and marketing: promoting and selling products/services

The sales and marketing function is responsible for promoting and selling products or services. This involves developing marketing campaigns, identifying potential customers, negotiating contracts, and closing deals.

The sales and marketing function is essential because it helps businesses increase revenue by selling more products or services. A well-run sales and marketing function can also help build relationships with customers and generate leads for other parts of the business.

After-sales service: providing support to customers once they have bought a product/service

The after-sales service function is responsible for providing support to customers once they have bought a product or service. This involves dealing with customer queries and complaints, providing technical support, and arranging repairs or replacements.

The after-sales service function is essential because it helps businesses keep their customers happy and loyal. A well-run after-sales service function can also help resolve problems quickly and efficiently and reduce the number of returns.

If you are looking to learn more about supply chain management, we have the perfect course. The Supply Chain Management course covers all of the key topics mentioned in this blog post. You will learn how to identify and select suppliers, produce goods efficiently and meet quality standards, get products to the right place at the right time, promote and sell products/services, and provide support to customers once they have bought a product/service. Enroll now and gain the skills you need to effectively manage your company's supply chain!

supply chain management efficiently meet quality
Stress can take a toll on your body and mind. Learn about the benefits of stress management and how to reduce stress in your life.
Eryk Branch
Blogger

He is a content producer who specializes in blog content. He has a master's degree in business administration and he lives in the Netherlands.

Related Posts
Our team of experts is passionate about providing accurate and helpful information, and we're always updating our blog with new articles and videos. So if you're looking for reliable advice and informative content, be sure to check out our blog today.