Understanding 4 Elements of Supply Chain Management

The efficiency of the supply chain plays a massive impact on the success of any organisation. To ensure that you boost your business’ productivity and profitability, you must focus on improving and optimising your supply chain. The key to achieving success is focusing on your supply chain’s core elements.

What is Supply Chain Management?

Supply chain management handles the entire production or flow of goods or services. This starts from the raw components until the final product is delivered to customers. Companies create a network of suppliers or “links” within the supply chain and move the product from raw material suppliers to those directly dealing with customers.

Why is Supply Chain Management Important?

Supply chain management is essential as it is a highly complex system that small and large companies use to ensure that customers receive their products. A well-organised supply chain management system will optimise operations to make them fast and efficient.

In today’s time, supply chain management has become essential as it directly impacts the success of a business and customer satisfaction. Effective supply chain management can also enhance customer service, decrease operating costs and improve a company’s financial standing.

Effective supply chain management improves customer services as customers simultaneously receive the right product mix and quantity. Customers will also receive their products at the right location, and businesses can quickly offer follow-up support after a sale, contributing to customer satisfaction. The other benefit of effective supply chain management is reducing operating costs through decreasing purchasing, production and total supply chain costs. Lastly, effective supply chain management leads to an improvement in financial positioning through a decrease in fixed assets like warehouses and transportation and an increase in cash flow.


Elements of Supply Chain Management

A well-developed supply chain strategy that focuses on the core elements of supply chain management will provide plenty of benefits to your business, including improved customer relationships and satisfaction, response, efficiency, performance and quality improvements. Some of these elements include the following:

1.    Integration

Integration occurs during the strategic planning phase and is vital throughout your communications and information as well as data analysis and storage. An accurate, single-view and reliable source of contact on your supply chain activities and details will reduce human error, over/under-stocking, shortages, and delays and enable you to plan for and mitigate supply issues or interruptions.

Therefore, you should assess your technology needs and ensure your choice provides you with the right tools to integrate your entire supply chain solution while being flexible enough to grow and change your business. Manager duties will also become successful and more efficient when teams are integrated into the sequence of processes, as it becomes easier to monitor operations and identify areas for improvement.

2.    Operations

Supply chain operations are a crucial aspect of the supply chain process, as it ensures that workers have consistent work. Managers will typically monitor the day-to-day operations to ensure that the different supply chain phases stay on track. Through monitoring equipment to ensure efficiency, the operations team will understand when to make improvements within the supply chain. Many organisations have started adopting lean manufacturing strategies where processes are consistently evaluated to determine which parts of your operations will become more efficient.

Using the right software will enable you to align your operations with your entire business and provide reliable and accurate information on current inventories and production, allowing for more efficient processes.

3.    Purchasing

Understanding ahead of time what your supply chain process will look like within your business is a vital aspect. You must understand precisely what goods are available to purchase within your company and whether it is supplies, tools, materials or equipment. Hiring qualified purchasing personnel and ensuring that your employees understand inventory management is essential to an effective supply chain. All this ensures that the business doesn’t run out of materials which could lead to significant delays in production. Another issue detrimental to the business is having the wrong person in this position, as there is the possibility of overbuying raw materials, which could strain your company’s budget.

With the help of supply chain software, you can source products in the supply chain and ensure that you take advantage of competitive pricing and reliable products. Demand forecasting will give you a practical and solid way of guaranteeing that you have the right product at the appropriate quantity and time.

4.    Distribution

The last step in the supply chain is when customers receive your products from the store shelf or through direct delivery. Supply chain distribution should be thoroughly planned for products to reach their final destination, which is usually the customer. Your business can implement logistics software into the business so employees can learn or outsource a third-party logistics (3PL) company to ensure that products are appropriately handled and reach customers quickly.

There are also different options of stock origin, which allows you to centralise your delivery and returns process for a real-time inventory, stock location and order status regardless of whether the order originated online or in-store.



By knowing the four elements of supply chain management, you will gain a deeper understanding of what you can focus on and improve within your own business. Therefore, being able to meet your business’ supply and demand needs, you will be able to improve customer relationships and overall business performance.