Types of Supply Chain Management (SCM) and Its Role in a Business Strategy

In Business Skills, Management Skills
The Process of Supply Chain Management

Supply Chain Management is a set of the stages that every company should undergo when it comes to processing the distribution of goods, starts from the production stage. Etymologically, supply chain management is defined as an “umbrella process” that makes manufactured products marketable to the consumers with a structural point of view.

The following are some detail commentaries about supply chain management:

Types of Supply Chain Management (SCM)

Each type of supply chain management is differentiated based on the parties who are engaged in the process of the goods distribution. Below are the types of Supply Chain Management.

A. Upstream Supply Chain Management

An Upstream Supply Chain assigns the manufacturing company as the distributor and connection or the link to wholesalers or resellers who market their products. The primary form of the activity in an upstream supply chain management is the goods procurement to the company involved.

Read also: Customer Relationship Management

B. Internal Supply Chain Management

The Internal Supply Chain Management refers to the input process of raw materials into the warehouse which is then will be transformed become the distributed primary materials by the company. Commonly, a company keeps doing a sustainable internal supply chain to be able to produce quality production output for the enterprise. In primary activities of the internal supply chain management, the company performs production management, fabrication, and products inventory control.

C. Downstream Supply Chain Management

The Downstream Supply Chain Management engages some activities that are comprising all of the company’s product marketing activities to start from the product delivery to customers or consumers. The main activities of downstream supply chain management include the arrangement of distribution direction, systematic warehousing, transportation, and the last delivery service.

The Role of Supply Chain Management in a Company

Every producer should apply a supply chain management as a business strategy to achieve primary goals such as to maximize the thorough value by the company or organization.

In other words, the process of the supply chain management should be integrated to increase the overall value of the supply chain management implementation.

To execute a supply chain management activity firstly requires data processing and input of it. The aspects that are underlying the implementation of supply chain management include:

1. Product Distribution

Product distribution refers to the deploying products activities with an aim to get sales links that are spread evenly. It’s an input element of a supply chain supply management which consists of a number suppliers and their locations, the availability of production facilities, production centers, warehouses, and consumers on the market.

2. The Distribution Strategy that is Used in the Implementation

To optimize the company’s production and the deployment of the company’s products to multiple customers, the company needs an appropriate distribution strategy. This input element is divided into the spread of decentralization and centralization, through the help of a third person or a direct sales strategy.

3. Inventory Management

Recording in the process of supply chain management is necessary to get the quantity and marketing locations that are recorded so that the next production in the company can be mapped.

4. The Flow of Fund

The data input of the flow of fund explanation to the business is required to run an organized supply chain management system. The arrangement of the flow of fund in a supply chain management is executed by making payment terms and methodologies to conduct the product transaction activities.

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