---
title: What is supply chain management and why is it important?
description: Find out why supply chain management is crucial to the success of organisations producing goods or services.
image: https://online.hull.ac.uk/hubfs/Logistics%20tn.jpg
---

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# What is supply chain management and why is it important?

[MSc in Logistics and Supply Chain Management](https://online.hull.ac.uk/blog/tag/msc-in-logistics-and-supply-chain-management)

Supply chain management deals with the entire production process behind a good or service, making it one of the most crucial components to an organisation’s success.

 

Effective supply chain management is essential for the smooth-running of any organisation that produces goods or services.

 

To function effectively, this production process requires a network of suppliers, which can be understood as the links in the supply chain. As the production process flows, these links will move the product or service along the supply chain, from the suppliers of raw materials to the organisations that deal directly with consumers.

 

Got a question about the Hull Online MSc in Logistics and Supply Chain Management? Complete the [form below](https://online.hull.ac.uk/blog/what-is-supply-chain-management-and-why-is-it-important#Contact-us-form) and one of our friendly and knowledgeable Course Adviser team will get in touch.

 

## **Key components of supply chain management**

 

Some of the key components of supply chain management include:

 

**1. Planning**

 

Effective supply chain management involves planning and managing all the resources needed to meet consumers’ demand for an organisation’s product or service. Once a supply chain has been put in place, it’s also important to plan what metrics will be measured to help determine whether the supply chain is effective, efficient and meets organisational goals.

 

**2. Collaboration**

 

The next step is sourcing the right suppliers to provide the goods or services needed to create the final product. This involves managing relationships with suppliers and related tasks such as ordering, managing inventory and managing payments to suppliers.

 

**3. Production**

 

This involves organising and managing the tasks around manufacturing, quality tests, packaging and scheduling for delivery.

 

**4. Logistics**

 

This involves managing customer orders, scheduling delivery, dispatching loads, invoicing and receiving payments from customers.

 

**5. Returns**

 

Things can go wrong and a customer might not be happy with the end product or service they’ve received. Having a process in place for receiving defective or unwanted goods is also an important part of the supply chain management process.

 

**6. Support**

 

Another essential part of the supply chain management process is having sufficient support processes in place to manage information throughout the supply chain and to ensure compliance with any regulations. These support processes can include: HR, IT, finance, product design, facilities management, sales and quality assurance.

 

Got a question about the Hull Online MSc in Logistics and Supply Chain Management? Complete the [form below](https://online.hull.ac.uk/blog/what-is-supply-chain-management-and-why-is-it-important#Contact-us-form) and one of our friendly and knowledgeable Course Adviser team will get in touch.

 

## **Why is supply chain management important?**

 

Some of the reasons why supply chain management is important include:

 

**1. It minimises costs, time and waste**

With an effective supply chain process in place, an organisation can produce and deliver products or services to customers in the most cost-efficient, time-efficient and sustainable way possible.

 

**2. It helps to satisfy consumer demand**

 

Effective supply chain management means organisations can more accurately anticipate demand for their products or services, and adjust their production levels accordingly.

 

**3. It can help to get the best price for a good or service**

 

Many products and services have a limited shelf life. At the end of their peak sale season, these are often scrapped or sold at big discounts to make way for others. With effective supply chain management, organisations can use forecasting techniques to optimise their pricing according to consumer demand and improve their profit margins.

 

*The University of Hull Online offers a flexible *[*online MSc in Logistics and Supply Chain Management*](https://online.hull.ac.uk/courses/msc-logistics-and-supply-chain-management)* that will equip you with the advanced knowledge and skills you need to become a successful supply chain manager. **Complete the form below with any questions you have about the course and a Course Adviser will get in touch with you to answer them. *

 

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