Chang B. Ko Talks About The Importance Of SCM (Supply Chain Management)

Have you ever walked into a store like Best Buy and thought to yourself, “How does all of this stuff get here?” If you thought it took a lot of work and had a lot of moving parts, you would be right. There is only one real process that pulls everything together and that is supply chain management.

Chang B. Ko, author of “Strong Firms Need SCM: Global Company’s Key Competitiveness Lie in Logistics Solution,” explains, “Clear visibility and constant adjusting of these processes is key to the success of a company’s supply chain. Supply chain management is a difficult process, but once incorporated efficiently, it can have exponential effects on a company’s earnings.”

What is Supply Chain Management?

Supply chain management (SCM) is the management of the flow of goods. It includes the movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption. Another way to think of supply chain management is the management of the chain of supplies.

What kind of things do you need to look at when setting up a supply chain management process? Take a bottle of water for example. It only consists of 4 things: water, a bottle, a bottle cap and a label. Even though the product might be basic, the process of getting that bottle of water into the consumer’s hands at an affordable price is a complex supply chain. You’ll need someone to find and negotiate cost of the empty bottles and caps. Then you’ll need to ship those bottles which means you’ll need boxes, a driver, truck, fuel and insurance. Also, you need a label for your bottles so now you’ll need to design, print and ship them to your water plant.

Your water plant is were you put everything together so you will need things like electricity to run it, employees, bottling machines, labeling machines and day-to-day items like light bulbs, garbage bags, machine parts, cleaning supplies and toilet paper to run your plant. Once everything is together, you’ll still need a distribution center to ship all your bottles of water to all of the stores and vending machines that will be selling your water.

If selling and manufacturing a bottle of water is so complex and has so many moving parts, how do you make a profit? You make a profit by having a strong supply chain management process in place that you are always working on and perfecting so that you can lower your costs and increase your profits while making sure that you have enough product to meet the demand of the consumer.

A very basic and simple way that you can get started implementing SCM processes is to first map out all of the steps it takes to get your product into the hands of the consumer. Once you know what needs to be done and what you are doing, you’ll be able to start to see your strengths and weaknesses.

If you would like to learn more about how to implement or perfect your supply chain management process from Chang B. Ko, an expert in SCM and Logistics functionality with an extensive background in accounting, then check out his book at: