What Does Supply Chain Management Mean?

Efficiency is key in the construction industry – especially when it comes to supply chain management. But what exactly does supply chain management mean?

Supply chain management refers to the production flow of goods or services. It begins with the raw materials or components and ends with the final product. It’s a process consisting of various techniques, people, technology, and resources – all working together to deliver products or services to consumers.

Let’s explore this further. Read on to learn more about what supply chain management means, the role of supply chain management in construction, and the key phases of SCM. We’ll also be discussing what a supply chain management platform is and how it can help you.

What Is Supply Chain Management (SCM)?

Supply chain management involves a range of activities, from sourcing raw materials to the delivery of goods or services to the end customer.

It involves coordinating and integrating these functions to optimise the flow of goods and services throughout the whole supply chain. It’s all about maximising value, for the customer and the company. This can be done by:

• Minimising waste
• Reducing costs
• Improving overall efficiency

In some sectors, supply chain management is less of a priority. However, in construction, it’s extremely important. Let’s explore this further in the next section.

Supply Chain Management in Construction

In construction, SCM refers to the management of materials, finances, and information throughout the process – from:

Supplier – Manufacturer – Wholesaler – Retailer – Consumer

It plays a key role in improving communication between stakeholders to ensure the project remains up to standard, from the beginning to the end. SCM ultimately determines whether a construction project can be completed within a certain budget, without delays.

Let’s look at a typical construction project supply chain:

• Raw material suppliers – Companies providing basic construction materials such as lumber, cement, and bricks
• Manufacturers – Companies that take raw materials and turn them into products such as doors, electrical components, and windows
• Distributors – Those that distribute the materials and products to the construction sites
• Construction Contractors – Those responsible for managing the project, coordinating with suppliers and subcontractors
• Subcontractors – Companies hired by the contractor to perform jobs such as carpentry, roofing, and plumbing
• Logistics providers – Companies who transport the materials to construction sites – such as shipping companies and trucking companies
• Retailers – Shops that sell products directly to contractors – products such as tools, PPE, and paint
• Waste Management – Companies who deal with any construction waste and dispose of any unused materials and recycling

The construction supply chain involves a variety of bodies, companies, and service providers who work together to ensure the necessary materials and services are delivered to the construction site efficiently. They all play a role in ensuring the construction project runs smoothly.

The Key Phases of Supply Chain Management

Let’s explore the five key phases of supply chain management:

1. Planning – This involves predicting how you’ll meet customer demand and scheduling resources. It’s all about predicting the future needs of customers and manufacturers, ensuring you have the right resources available.
2. Sourcing – Supply chain managers must research vendors and arrange contracts – this ensures the materials are available on time and within budget. Our Compliance Chain platform can help you source compliant suppliers.
3. Manufacturing – This involves finalising the product – it can include testing, inspection, and packaging.
4. Delivery – This involves ensuring the relevant customers and bodies have access to the products, which can involve shipping or managing inventory.
5. Returns – Known as ‘reverse logistics,’ this process involves customer service. It involves the management of returning defective goods, replacing goods, repairing products, and dealing with customer complaints.

One of the key principles of SCM is the ‘value chain.’ This refers to the series of activities a company performs to deliver the product or service to the market. Each step adds value – and effective supply chain management aims to streamline these activities to eliminate inefficiencies.

Why Is Supply Chain Management Important?

Supply chain management is important as it ensures that operations run smoothly – ensuring the relevant bodies (for example, construction sites) have access to goods and services. In a wider context, a steady supply chain ensures that society functions well. It means we, as members of society, have access to the products and services we need to go about our day-to-day lives.

41.9% of businesses have experienced between 1 and 5 supply chain issues that have resulted in significant disruption. Ultimately, poor supply chain management can be catastrophic for business operations.

SCM directly impacts efficiency, cost-effectiveness, and customer satisfaction. It optimises supply chain processes along the way to minimise waste and reduce costs. Ultimately, a well-managed supply chain enables companies to:

• Adapt to changes in demand
• Mitigate risks
• Capitalise on opportunities
• Drive sustainable growth and profitability

A well-managed supply chain enables companies to adapt quickly to changes in demand, mitigate risks, and capitalise on opportunities, ultimately driving sustainable growth and profitability.

What is a Supply Chain Management Platform?

48% of companies are under pressure to improve sustainability across the supply chain. At Compliance Chain, we understand the importance of a strong and streamlined supply chain. This is why we aim to help businesses within the construction industry monitor their supply chains.

Our platform offers end-to-end supply chain management software and tools to help you identify and monitor any risks within your supply chain, ensuring you remain completely compliant.

Compliance plays a huge role in keeping your supply chain running smoothly – and we are here to help. Trust us to keep you compliant with regulations and standards throughout the supply chain.

Contact us today to learn more, or sign up today to get started! Begin streamlining your supply chain and ensuring total compliance with Compliance Chain.

Download our supply chain management brochure to learn more today,