Supply chain management seeks to maximize the productivity of organizations as well as the value that can be offered to the customer. This is represented through the concept of a sustainable competitive advantage. A supply chain must cover every aspect of a company's operation, including production, logistics, development and the systems that run these activities.

Supply chain management dictates that every product that reaches a consumer must represent the complete and total effort put out by the multiple organizations involved. The organizations are known as the supply chain. Another important idea in this concept is understanding what happens within your four walls. This means that even though supply chains have long existed, organizations still find ways to create their products in an inefficient manner which causes them to incur higher costs and lower productivity.

Supply chains are linked completely together through flows of physical production and information. Transformation, storage and movement of goods are a part of physical production. Information production is the combination of long-term plans, daily output of products and the end-user experience. By combining physical and information production, different organizations are connected and work in a team formation.

Why Is It Important?

In order for an organization to function, they must be able to provide everything in a fast and cost-effective manner. Companies are only as strong as the links which hold them together. Supply chain management services teach organizations, corporations and businesses how to implement Total Quality Management, Just-in-Time Manufacturing, Quick Product Development and other ideas which are designed to make them more successful.

A firm's structure will often change once this type of management is implemented. So much of the organization's behavior changes that supply chain management cannot simply be used in one part of the system. The organizational system must be able to totally absorb the design elements of it, or the business owners will find that they are making some areas of their system out-pace others.

Maximizing performance in this manner must also be accompanied with intelligent systems that are powerful enough to manage the organization. A smart information system can automatically run large parts of an organization and lower labor costs by a substantial amount. Modern thinkers use the latest technology in order to make organizations less labor-oriented and more automated.

Lastly, organizations must have sufficient cross-capabilities in order to compete in the today's globalist economy. It was fine for organizations to be very good at only a few areas, such as finance, marketing and operations, in the past. However, now competition is becoming fiercer and organizations need to learn how to diversify. Supply chain management allows organizations to adapt themselves quickly to new markets and helps them maximize their potential to be profitable.