SUPPLY CHAIN AND ITS MANAGEMENT
A supply chain can be explained as a whole system that interlinks various workflow from production and distribution of a specific product or service between a company and its suppliers. This network involves producers, vendors, warehouses, logistics companies, distribution centers, and retailers. A supply chain is a complete package of everything commencing from the delivery of source materials from the supplier to the manufacturer to the deliverance of the product to the consumer. With the harmonical engagement of an organization/individual, and with adequate resources, activities, and technology, the supply chain can create and sell a product.
It is crucial to understand that each and every stage of a supply chain looks like running a completely different industry. For instance, there are raw material extraction industries involved in a supply chain which is totally a different field compared to the next process called manufacturing. And a complete knowledge about other fields in a supply chain is very essential for the successful operation of a company.
Types of supply chain
1. Supply Chain for an e-Commerce Company
Generally, an e-commerce company operates through a website just like a marketplace by selling various products on the internet platform. A customer can place an order for a product and by using technologies the order is processed, which leads to payment transactions for the order done by the payment processors. The payment processors use their own systems or sometimes they involve banks and other providers too by employing third parties such as PayPal to receive the payment from the consumer, which is branching of a new supply chain.
The process involved in e-commerce is completely different from the regular supply chain process. Here when the warehouse receives an order, the product is readied for delivery by the warehousing company which may be a third-party logistics service or in-house. The product is then shipped from the warehouse to the shipping company via in-house or a third-party service provider. The package reaches the destination to the customer’s door.
2. Generic Supply Chain
A typical supply chain workflow goes from sourcing the raw materials, designing & developing the basic parts from these materials for the main product, creating the product, order fulfillment, delivery of the product to the consumer, and finally customer support and return services.
Supply chain managers help a company to maximize customer satisfaction by monitoring the lead time and coordinating the processes in each step of a supply chain.
Rectification in supply chain challenges
v Adhering to protocols like checking the suppliers to procure raw materials, suppliers' warehousing capacity, checking out logistics management, analyzing the supply chain plan from real-time data, etc.
v Management of Delayed or lost goods.
v Proper management of stocks and inventory for supply may minimize the waste due to an inadequate production cycle by wrong measures.
v Innovation and technology, automation, and digitalization of a company influence greatly for futuristic approach in the development of a product and services for both the company and the customer.
v Flexibility is a key factor in the deliverance of success in a supply chain. Any sudden changes in the supply chain like external factors can cause disturbance in the flow of a supply chain. So, always expect unexpected circumstances and be prepared to tackle them.
v The primary goal of every business or company is to satisfy the customers. Providing a quality product and value-added services will certainly appease the customers and business partners too.
Supply chain management processes
The core of supply chain management comprises the processes such as Procurement, Manufacturing Flow Management, Order Fulfillment, Customer Relationship Management, Customer Service Management, Demand Management, Product Development and Commercialization, Returns.
Supply chain management
Supply chain management is the administering of materials, the flow of goods or services to maximize the quality, quantity, information and profitability, as they move in a process from supplier to manufacturer to wholesaler to retailer and then to the consumer where customer service is managed.
SCM involves product development and designing, strategic planning, execution of the plan, monitoring and control of the workflow. Cost management, reduced inventory, increased transaction speed and improvement of workflow with profit in mind are the primary goals of SCM. To manage such significant processes, software and a system model are designed through data analytics and implementing the model may help a firm to compete in the market.
Some of the supply chain activities are designing, manufacturing, packaging, or transporting.
High transportation costs, container shortages, long lead times on raw materials, the capacity of warehouses, port delays, inflated prices are a few difficulties faced by the supply chain and to manage such things few models are designed for efficient supply chain flow.
They are
1. Continuous-flow - items are produced to meet predetermined stock levels and are scheduled to ensure a continuous flow of information and product, based on a make-to-stock decoupling point. Manufacturers who produce the same product regularly, with tiny design fluctuation or alteration.
2. Fast chain – involves the incorporation of current trends by updating product portfolios mostly used by businesses that manufacture finished products and short life cycle trendy products.
3. Agile – focuses on market mediation costs. This is an information-centric model where investment decisions are made based on real-time data and short-term trajectory from a current consumer’s transaction. This model is followed for manufacturing processes that can produce small batches but can also manufacture the excess capacity.
4. Custom-configured: This is a combination of the agile and continuous flow models. Usually followed by car companies with the limited configuration of product specifications (prototypes) during assembly and production. The continuous flow model will be processed where the product is built before configuration, and the agile model is utilized for downstream processes.
5. Efficient chain- Followed by industries who compete for the same customers for their market products. Managing the machinery to reduce cost is the only way for this model to work and it relies heavily on commodity and raw material prices.
6. Flexible- will reduce the shortages or excess inventory, this model analyses and reveals the information of accurate production of parts necessary to create specific models and lead time for each. It determines the company’s immediate production capacity and the products are produced based on its availability.
Among all the most used model are the Supply chain operations reference (SCOR) model which helps evaluate businesses and perfect supply chain management for effectiveness and efficiency of sales and operational planning.
Benefits of supply chain management
§ Optimization of inventory and overhead costs.
§ Shipping optimization.
§ Stronger cash flow and a sharp rise in business.
§ Better quality control and collaboration with suppliers.
§ Reduced risk management
§ Better visibility and data analytics.
The Importance of Supply Chain Management
1. Enhanced Customer service- Right Delivery Time, After Sale Support.
2. Increases Profit Leverage of a company.
3. Operating Costs reduction- leads to less production cost, less purchasing cost, reduction of overall supply chain cost, etc.
4. Proper redesigning of the network may decrease the fixed assets such as plants, warehouses and transportation vehicles in the supply chain, saving the firm from building the expensive assets.
The supply chain plays a major role in the sustenance of human life by delivering products related to healthcare (medicines), food, and other daily life supplies for improved quality of life, job opportunities, etc. The supply chain management also works on green projects like eco-friendly packaging and recycling of products to decrease pollution. Though the energy consumption of this service is high, this is also managed by the proper Supply chain management for energy-efficient supply.