Defining the Supply Chain Management – Many specialists narrowly define the supply chain management as the mechanism that can maximize the benefits of a business by reducing the costs of the production factors. But, the supply chain management actually includes the entire process, from the fabrication of the product to its delivery to the final consumer.

For this reason, a larger specter defines this tool as a complex process that focuses on the production and trading complexity, taking into account the turnaround speed and market’s response.

Once the globalization of the markets has seriously extended, this tool became a necessity for those companies which are interested in the most effective ways of getting high returns of their investments.

The Necessity of Supply Chain Management

The supply chain management has become a necessary tool especially for those companies that activate within the global scale. However, this tool is impressively useful for any business that also competes at a local level.

Of course, as it mostly addresses to the entire range of processes, from the production factors to trading methods, the first industries that need this tool are those that activate within the manufacturing field.

The supply chain management helps all these industries to get competitive prices and better qualities for their products, being hardly equaled by the companies that lack this tool.

Reasons of Its Importance

The supply chain management has become important due to some reasons. One of these reasons is the fact that this mechanism allows businesses to get a competitive edge by exploiting their core competencies. As the business climate has drastically changed over the last years, it became more competitive than it has ever been.

For this reason, the businesses have to develop those core characteristics that can help consumers to distinguish them on the market. Another great reason is the fact that the supply chain management allows companies to divert the right resources in order to meet their main objectives.

Competitive Advantages

The great thing about supply chain management is that it provides the chance to any business to obtain the competitive advantage. This thing actually means that any business, if correctly applies the supply chain management’s strategies, has the chance to become number one on the market.

As you know, the main strategy of this theory is to help businesses to obtain the lowest production costs possible. This thing confers a plus over other competitive offerings. By continuously reducing the costs, the businesses have the chance to invest in the innovation cycle, thing that allows them to reduce the costs even more.

Value Advantage

Through supply chain management, any producer can actually get a cheap mass manufacturing for its products. This thing leads to mass customization, which actually means that the customers will enjoy a great value advantage through better, customized products.

Through an effective implementation of the supply chain management, the implementer can create products that show a longer life cycle by embedded them with the ultimate and highly developed features.

Producing goods, which show a high level of development, the producer can put its worries to rest, as its competitors need a long time to develop products that show the same quality and highly developed characteristics.