An Overview of the Supply Chain Management Process
Supply chain management is important to make sure your company’s supply chain is efficient and cost-effective. There are different components of supply chain management in order to be confident that it’s effective.
Supply Chain Planning
The first step in the supply chain is supply chain planning. You need to develop a strategy that clearly addresses how your services or products satisfy the necessities and demands of your customer. The planning process should include a strategy that will give you maximum profit. Supply chain management mostly focuses on planning and developing a set of metrics.
Develop or Source
After the supply chain planning phase, the next step is to develop or source. In this stage, you should be concentrating on building a relationship with suppliers for the raw materials that are required for production. This involves identifying suppliers that will be dependable, as well as determining different planning methods for delivery, shipping, and payment. Companies should select suppliers that deliver the service and items that are required to develop their own products. You need to set up pricing, delivery, and payment with suppliers and set the metrics for controlling, as well as improving, relationships. Not only do companies need to work with suppliers but they also must combine processes for handling their own services and goods inventory. The company needs a plan for receiving and looking at shipments, moving them to facilities, and approving necessary payments.
The next step is the actual manufacturing of products. In this stage, the products are designed, made, tested, packaged, and delivered. During this stage, you need to plan all the activities required for manufacturing, testing, and delivery. This is one of the most metric-sensitive parts of the supply chain and companies should be measuring worker productivity, production output, and quality levels.
During the delivery stage, products are delivered to the customer. This stage is the logistics phase, where customers’ orders are accepted and then the goods are delivered. During the delivery stage, companies need to get a receipt of the order from a customer, establish warehouse networks, pick carriers to deliver the products, and also set up an invoicing system to get payments.
The final stage of supply chain management is called Return. During this stage, the customer returns damaged or defective goods to the supplier. Here you would need to handle customer questions and respond to any complaints. This stage can be problematic for many customers. Supply chain planning needs to find a responsive and flexible way of accepting defective, damaged, and extra products back from customers and then facilitate the return process. This stage is important in order to minimize any potential problems with customers. This stage is also the same for the suppliers. If the company receives defective or low-quality items from suppliers, it must be able to return them.
Each different stage of supply chain management is important for an organization. With the right planning, you can make the supply chain leaner, which you can then use as a competitive advantage.