Objectives of Supply Chain Management and Its Approaches

Supply chain management is a fundamental aspect of a company, especially in today’s increasingly competitive market. The purpose of supply chain management is to align operational processes, from planning to product distribution, so that the cycle continues to run smoothly.

So, what are the other objectives of supply chain management? This article discusses the goals and approaches of supply chain management in depth. Read the information below.

Objectives of Supply Chain Management

Supply chain management (SCM) is the coordination of a company’s entire production flow, including the management of information and the movement of goods to the end consumer.

Supply chain management has become increasingly crucial as international markets expand, enabling companies to operate and collaborate even when based in different countries. Statista notes that in 2024, the global supply chain management market reached $25 billion.

SCM ensures that the effective coordination between suppliers and manufacturers remains strong, especially in the distribution of products to customers. Furthermore, here are several objectives of supply chain management that can be explored:

1. Improving Coordination Efficiency

Supply chain management aims to balance supply and demand. By using an integrated system, SCM ensures that warehouse inventory can meet incoming demand. If a stock shortage occurs, the company can immediately procure goods to continue production.

Efficient coordination minimizes operational costs, especially in the distribution and production sectors. Supply chain management can plan distribution as efficiently as possible by considering transportation modes, distribution routes, and other logistics management factors.

2. Increasing Customer Satisfaction

Careful planning and proper execution make it easier for customers to obtain the goods or services they need. This will certainly improve customer satisfaction with the services provided.

In addition, SCM identifies issues that affect customer satisfaction and prevents the same mistakes from happening again.

3. Expanding Business Reach

One of the main objectives of supply chain management is to grow the business and sustain it amid intense market competition. Companies are required to provide products or services that are affordable, varied, timely, and high-quality to continue being “chosen” by consumers without compromising the company’s vision and mission.

Therefore, integrated management, from raw material procurement to product distribution, is essential to ensure the company can continuously meet customer needs.

4. Mitigating Risks

Supply chains often face challenges, including disruptions and stock shortages. Therefore, SCM helps mitigate and anticipate these risks by continuously monitoring ongoing business operations and ensuring that all procedures are carried out in accordance with company standards.

Supply Chain Management Approaches

There are several strategic approaches to managing the supply chain based on a company’s long-term goals, needs, and priorities. Here are the details:

1. Six Sigma

This approach is data-driven and aims to reduce variability and defects in supply chain processes. Six Sigma uses data and statistical analysis to effectively identify areas that need improvement.

This method can be approached using the DMAIC framework, which comprises define, measure, analyze, improve, and control. You need to identify problems in the supply chain, measure them, determine their root causes, implement solutions, and maintain those solutions to keep the supply chain running smoothly.

2. Agile Supply Chain Management

This method responds quickly to market changes and customer demand. Examples of this supply chain management approach include implementing flexible contracts with suppliers, enabling faster production batches, and quicker inventory replenishment.

3. Resilient Supply Chain Management

Resilient SCM focuses on building a supply chain that can adapt to changing market conditions and unexpected disruptions. This approach identifies risks that could potentially disrupt supply chain flows and develops appropriate preventive strategies.

4. Total Quality Management (TQM)

TQM aims to improve the overall quality of the supply chain, thereby increasing customer satisfaction. Examples of practices that can be implemented include applying standardized operating procedures to support product quality and monitoring supplier quality.

5. Digital Supply Chain Management

As technology continues to advance, SCM software and digital platforms are increasingly widespread. Statista predicts that the global supply chain management market will grow rapidly, even doubling in size, along with the SCM software market, which shows a strong growth trend.

Digital supply chain management leverages machine learning, the Internet of Things, and artificial intelligence to enhance all aspects of SCM, including planning, logistics management, and future business forecasting.

6. Green Supply Chain Management

This approach emphasizes practices that reduce the supply chain's environmental impact and support social responsibility. For example, implementing a circular economy in the remanufacturing process. This process reworks damaged products into new-conditions without compromising their quality.

7. Lean Supply Chain Management

LSCM is an approach focused on reducing waste, aligning operational processes, and delivering value to customers. It prioritizes process efficiency to reduce operational costs while improving product and service quality.

Logistics Solutions for Supply Chain Support

In conclusion, the objectives of supply chain management are to improve operational efficiency, enhance customer satisfaction, mitigate losses from disruptions, and expand business reach.

One of the key components in the supply chain is transportation and logistics management. If your company requires logistics services for chemicals, you can rely on Chandra Asri Group!

Through logistics solutions, Chandra Asri Group, as #YourGrowthPartner, offers maritime logistics services, including more than 10 LPG and chemical transport vessels with capacities up to 106,650 DWT. This number can increase with future acquisitions.

In addition to maritime logistics, we also provide land logistics through PT SCG Barito Logistics and PT Chandra Cold Chain with a fleet of 155 trucks tailored to your needs. We also manage warehouses owned by Chandra Asri Group and other clients in Cilegon and the Java region.

So, ensure your chemical supply chain remains efficient by choosing reliable logistics solutions! Contact us today!