SUPPLY CHAIN MANAGEMENT

Supply Chain Management

Supply Chain Management

Introduction

Supply chain management or simply known as supply chain is an important & very crucial department of business. It can be called the bloodline of any firm or organization especially the ones involved in manufacturing of products like textile, mobile phones, fast food or anything that has to do with manufacturing. In plain business terms it is management of successfully converting raw material also known as the input of any business into finished goods also known as the output. The management utilizes a complete set of various processes and procedures to ensure efficient utilization of business's resources in turning the raw materials into finished products. There are 3 layers in Supply chain namely:

i. Upper layer - comprises of suppliers of various raw materials for a business

ii. Internal stream layer - the actual production process of the manufacturing firm involved in converting raw materials to finished goods

iii. Bottom or Downstream layer - the placement "P" of the marketing strategy responsible for the delivery of finished goods to clients via distribution centers, shops, wholesalers and retailers etc.

A supply chain, considered as a system, can also be described as a distributed network or channel through which information, materials, labor, equipment and currency flow. Though supply chains themselves are not new, four major developments forced thinking about them differently than in the past. The first motivating force came from the communications technology advances that forever changed the span of the marketplace for both the producer and the consumer. The second was the trend toward outsourcing in general, and global outsourcing in particular, which the information age enabled. The third was the increasing importance of timeliness in the marketplace. The fourth was the increasing emphasis placed on quality in all aspects of production and delivery.

Discussion

Supply chain management (SCM) is an integrated approach beginning with planning and control of materials, logistics, services, and information stream from suppliers to manufacturers or service providers to the end client; it represents a most important change in business management practices. SCM is one of the most effective ways for firms to improve their performance. With the purpose of managing the supply chain actions for realizing improvement in enterprise performance, it is necessary to improve the planning and management of activities such as materials planning, inventory management, capacity planning, and logistics with suppliers and clients. (Johnson, 2003).

The five SCM components

Plan

It is considered as the strategic segment of SCM. Strategies and business plans are made in order to carry out the remaining stages efficiently. Strategies are devised by the supply chain managers of the company devising best policies and strategies for the business.

Source

The next component is the selection of suppliers who will supply the goods and services, required to produce a good or service. Build up a set of pricing, delivery and payment procedures with suppliers and generate metrics for checking and improving the terms and relations with the suppliers. Further, one needs to design procedures for managing the inventory of goods and services he receives ...