Supply Chain Management Objectives

Main objective of the supply chain management (SCM)

The main objective of the supply chain management is to match the target market demand and it´s specifications (i.e., quantities, lead times, temperature, shelf life, geographical coverage, pricing) with our company and supply chain capabilities.

It is important to note that is not just our company´s capabilities, but the entire chain capabilities. That means the sales channels capabilities (ours and/or from our customers), the distribution capabilities (ours and/or outsourced), our stock levels and our storage capabilities to keep those stock levels, our manufacturing capabilities in case we manufacture, our procurement capabilities and our supply capabilities (ours and/or outsourced), and even our financial capabilities.

In order to fulfill the main objective, the SCM must accomplish 6 specific objectives.

Specific objectives of the supply chain management (SCM)

Ensure timing response to customer demands

Is not just having the capacity to fulfill the quantities demanded but also having the capacity to fulfill that demand in the right timing.

Minimize times between manufacture and sales

This is a shared task with other areas. From our side, we have to ensure materials, tools, components or any machinery needed to manufacture and once a final product is made, ensure its distribution on time according to the forecast.

SCM is not only about accomplishing time expectations from the different areas or our customers, but also is reducing those times with better planning and management.

Maximizing cash and reducing stock levels along the chain and improving payment times

Many companies try to have an excellent fill rate by having high stocks instead of having a safety stock dynamic policy according to different stock classifications and singularities.

As more stock levels, the more cash compromised and working capital is reduced. Business opportunities are lost by not having the needed working capital.

It is understandable that some companies have a late payment policy, but that policy should differentiate the different vendors and their importance to our supply chain. Some vendors can´t wait 90 days to receive a payment and the ones who can, are not necessarily the best ones.

Ensure geographic coverage for introducing and commercialization of the products and services

As supply chain managers we have to ensure materials and products transport, and also geographical coverage because most of the time, customers are not concentrated but disperse in a certain geographical area. Sometimes in order to introduce our products into a market, we have to invest in different transport methods.

Improve customer service by accomplishing logistics expectations and delivery conditions

At the moment of this post, I searched different customer service complaint surveys and most of them show 2 or 3 complaints on the top 5's regarding to supply chain complaints, specifically delayed deliveries and non-compliance with service level conditions.

Improving our lead times and our compliance with service levels will increase customer service and customer engagement.

Obtain competitive advantages that allow maximize profits

Having a supply chain management focus on value delivery while maintaining or reducing costs will allow us to compete more efficiently than our competitors and have more sales, more customer engagement and more profits.