Benefits and Challenges of Supply Chain Management (SCM)

Benefits and Challenges of Supply Chain Management (SCM)

Supply Chain Management (SCM) is a cross-functional enterprise system that uses information technology to help support and manage the links between some of a company’s key business process and those of its various shareholders. It is well known that supply chain management is an essential part of most businesses and is necessary to company success and customer satisfaction.

Benefits of Supply Chain Management (SCM): The major benefits that are possible with effective SCM are as follows –

  1. Faster or more accurate order processing;
  2. Reduction in inventory level;
  3. Weaker time to market;
  4. Lower transaction and material cost;
  5. Strategic, relationship with the supplier.
  6. Achieving agility and responsiveness in meeting the demands of customers and business partners.

Challenges of Supply Chain Management (SCM):

There are many challenges to SCM. Some are as follows –

  1. Developing effective SCM is complex and difficult;
  2. Challenges of achieving business value goals. It includes the challenges of rapid demand fulfillment, collaborative supply chain planning, and execution.
  3. The challenges of achieving customer value goals: It includes’ the challenge of giving customers what they want?, When and how they want it, at the lower cost.
  4. If accurate or over-optimistic demand forecast: Lack of adequate collaboration among the different department of the company.
  5. SCM is hard to implement and installed.