SCM Strategies

What strategies are used in SCM?

Firms use a number of different strategies and tools to manage the various aspects of a supply chain. For supply chain management to remain effective, firms must stay up to date with strategic advancements to make its processes leaner. SCM should constantly incorporate new strategies at every phase of the supply chain process.

Businesses can focus their overall strategy on vertical integration, acquiring steps either before or after them in the supply chain, to gain further control over every aspect or level of production. This can include forward vertical integration, which is the acquisition of distributors and retailers to become closer to the customer, or it can include backwards integration which entails controlling the inputs that go into the production of the final product. Vertical integration can help synchronize the entire chain, reduce risk and lower transaction costs.

Management and careful analysis of product life cycles can help supply chain management through identifying in advance the inputs and resources that will be needed for production and making sure that these supplies will be available and in stock. This is also important for smoothly integrating new and existing products and their required inputs into and the phasing out of outdated products out of the supply chain as well as planning procurement.

Inventory control manages and locates inventory. Not only is knowing the location of inventory important but also the quantity and the status of the inventory (raw materials, work-in-progress or finished goods). There are a variety of systems used to control inventory; many rely upon barcodes, QR codes and RFID tags. In addition to inventory control, there is inventory management, which tracks all orders, sales and deliveries. Inventory management is used to avoid over or under stocking and helps employees know the most up-to-date status of all transactions with customers and suppliers.

Among other logistic issues, the transportation of goods is one of the most relevant to SCM. It includes the frequency of trips, routes, load size, handling, packing, security manufacturing, warehouses, distribution centers, retail centers and the communication of the information that pertains to all these issues.

Other approaches include adapting just-in-time or lean processing principles to supply chain management.