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What are the core concepts of supply chain management?
Firstly, customer-centric and driven by market demand.
The production and circulation model of the supply chain driven by demand generates the driving force of the entire supply chain from the ultimate customers, and product production is coordinated based on actual customer demand rather than predicted demand. In this operating mode, not only can it quickly respond to market changes and meet consumer demand, but it can also reduce the risk of price reductions and promotions due to outdated products, which is conducive to reducing inventory, promoting enterprise capital flow, and increasing enterprise profits.
Secondly, it emphasizes that enterprises should focus on their core business.
Due to limited resources, it is very difficult for enterprises to gain competitive advantages in various industries and fields. Therefore, they must concentrate their resources on a specific area of expertise, namely core business. Establishing core competitiveness, clearly positioning in the supply chain, outsourcing non core business to other more professional enterprises, so that enterprises can more effectively concentrate resources, strengthen core business, and increase business flexibility through cooperation between enterprises.
Thirdly, all enterprises should cooperate closely, share risks and benefits.
In the supply chain management model, from the supply of raw materials to the purchase of end users, all links can be regarded as a whole. Enterprises on the chain should not only consider their own interests, but also pursue overall competitiveness and economic benefits together. Enterprises within the chain can reduce transaction costs between various links through close cooperation, effectively enhancing the long-term competitiveness and profitability of the supply chain.
Fourthly, pursue the integration of logistics, information flow, capital flow, workflow, and organizational flow.
The supply chain is a synthesis of workflow, physical process, financial process, and information process. These four aspects should be put together for overall optimization, and processes designed to match the internal and external environment and needs of the enterprise. Customers are the core of supply chain management, and customer demand is the starting point of the supply chain. Enterprises must design appropriate operational processes and logistics networks based on customer needs and profitability, so that the processing of various documents, transportation of products, and all business can be quickly executed according to standard requirements.
Fifth, utilize information systems to optimize the operation of the supply chain.
An information system is a tool that enables every link to obtain the necessary information for decision-making and operation, enabling work to be completed quickly. By utilizing advanced information systems, each link can obtain and process information more quickly, respond appropriately to new market changes in a timely manner, and achieve real-time feedback throughout the entire supply chain to meet customer requirements.
Sixth, shorten the product completion time to make production as close to real-time demand as possible.
Due to market demand fluctuations, the longer the time it takes to meet the demands of the end customers, the lower the accuracy of demand forecasting, and enterprises in various stages also need to maintain a large amount of intermediate inventory. The global market competition is fierce, and consumers have increasingly high requirements for products, including special requirements for product design, quality, and delivery time. To meet the needs of customers, various enterprises in the supply chain need to organize themselves to achieve on-demand production, respond to rapidly changing markets, and reduce the related risks of inventory backlog.
Seventh, reduce costs between procurement, inventory, transportation, and processes.
The concept of supply chain management advocates close cooperation among enterprises, establishing mutual trust through long-term cooperation, and reducing transaction costs during procurement; By integrating and optimizing processes, we can reduce costs at various stages and make the supply chain more efficient. In a fiercely competitive market where prices are difficult to increase, these cost savings have become a source of profit growth for many businesses.
The production and circulation model of the supply chain driven by demand generates the driving force of the entire supply chain from the ultimate customers, and product production is coordinated based on actual customer demand rather than predicted demand. In this operating mode, not only can it quickly respond to market changes and meet consumer demand, but it can also reduce the risk of price reductions and promotions due to outdated products, which is conducive to reducing inventory, promoting enterprise capital flow, and increasing enterprise profits.
Secondly, it emphasizes that enterprises should focus on their core business.
Due to limited resources, it is very difficult for enterprises to gain competitive advantages in various industries and fields. Therefore, they must concentrate their resources on a specific area of expertise, namely core business. Establishing core competitiveness, clearly positioning in the supply chain, outsourcing non core business to other more professional enterprises, so that enterprises can more effectively concentrate resources, strengthen core business, and increase business flexibility through cooperation between enterprises.
Thirdly, all enterprises should cooperate closely, share risks and benefits.
In the supply chain management model, from the supply of raw materials to the purchase of end users, all links can be regarded as a whole. Enterprises on the chain should not only consider their own interests, but also pursue overall competitiveness and economic benefits together. Enterprises within the chain can reduce transaction costs between various links through close cooperation, effectively enhancing the long-term competitiveness and profitability of the supply chain.
Fourthly, pursue the integration of logistics, information flow, capital flow, workflow, and organizational flow.
The supply chain is a synthesis of workflow, physical process, financial process, and information process. These four aspects should be put together for overall optimization, and processes designed to match the internal and external environment and needs of the enterprise. Customers are the core of supply chain management, and customer demand is the starting point of the supply chain. Enterprises must design appropriate operational processes and logistics networks based on customer needs and profitability, so that the processing of various documents, transportation of products, and all business can be quickly executed according to standard requirements.
Fifth, utilize information systems to optimize the operation of the supply chain.
An information system is a tool that enables every link to obtain the necessary information for decision-making and operation, enabling work to be completed quickly. By utilizing advanced information systems, each link can obtain and process information more quickly, respond appropriately to new market changes in a timely manner, and achieve real-time feedback throughout the entire supply chain to meet customer requirements.
Sixth, shorten the product completion time to make production as close to real-time demand as possible.
Due to market demand fluctuations, the longer the time it takes to meet the demands of the end customers, the lower the accuracy of demand forecasting, and enterprises in various stages also need to maintain a large amount of intermediate inventory. The global market competition is fierce, and consumers have increasingly high requirements for products, including special requirements for product design, quality, and delivery time. To meet the needs of customers, various enterprises in the supply chain need to organize themselves to achieve on-demand production, respond to rapidly changing markets, and reduce the related risks of inventory backlog.
Seventh, reduce costs between procurement, inventory, transportation, and processes.
The concept of supply chain management advocates close cooperation among enterprises, establishing mutual trust through long-term cooperation, and reducing transaction costs during procurement; By integrating and optimizing processes, we can reduce costs at various stages and make the supply chain more efficient. In a fiercely competitive market where prices are difficult to increase, these cost savings have become a source of profit growth for many businesses.