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A supply chain transforms raw materials and components into a finished product
that’s delivered to a customer. It is made up of a complex network of organizations
and activities, such as raw materials suppliers, manufacturers, distributors, retailers
and the customer.
Supply chain management is considered to be the orchestration between these
networks comprising procurement. It includes Planning, Sourcing, Manufacturing,
Delivery of the Goods and Return & Logistics.
It operates not only in the organisation but also across all the different channels in
the supply chain.
The supply chain management process is important because it can help businesses
be more efficient. It plays an integral role in all kinds of organisation regardless of
the goods or services they’re providing.
OBJECTIVES AND GOALS
Objectives :
1. Improving Quality :
Supply Chain Management is not solely concerned with waste reduction. Another
key objective is to ensure that the product is of the highest possible quality.
1. Enhancing Customer Satisfaction:
It is to maximise customer satisfaction. Your supply chain is by far the most
effective means of customer service.
2. Reducing Costs
It reduces a company’s operating expenses. It lowers the cost of all types of
business expenses, such as the cost of purchasing, manufacturing, and delivering
goods, by establishing an optimised supply chain.
Goals:
1.Fulfilment Efficiency
Supply chain management’s goals is to ensure that inventory is readily available in
customer-facing positions to meet demand. Organisations must strive to match
supply and demand on time by making the best use of cross-chain resources.
2.Customer Value Creation
Customers are the organisation’s lifeblood and necessitate the existence of a supply
chain. As a result, a core goal of supply chain management must be to constantly
meet or exceed customer needs.
3.Monitor Financial Success
One of the most obvious goals of supply chain management is to contribute to the
organisation’s financial performance. Historically, cost-cutting strategies have
focused on streamlining stock levels to reduce inventory carrying costs, automate
fulfilment operations to reduce labour costs
PROCESS
A supply chain is the collection of steps that a company takes to transform raw
materials into a final product. The five basic components of supply chain
management are discussed below
Plan
The initial stage of the supply chain process is the planning stage. We need to
develop a plan or strategy in order to address how the products and services will
satisfy the demands and necessities of the customers. In this stage, the planning
should mainly focus on designing a strategy that yields maximum profit.
Sourcing
After planning, the next step involves developing or sourcing. In this stage, we
mainly concentrate on building a strong relationship with suppliers of the raw
materials required for production. This involves not only identifying dependable
suppliers but also determining different planning methods for shipping, delivery,
and payment of the product.
Manufacturing
The third step in the supply chain management process is the manufacturing or
making of products that were demanded by the customer. In this stage, the
products are designed, produced, tested, packaged, and synchronized for delivery.
Delivery
The fourth stage is the delivery stage. Here the products are delivered to the
customer at the destined location by the supplier. This stage is basically the
logistics phase, where customer orders are accepted and delivery of the goods is
planned.
Return
The last and final stage of supply chain management is referred as the return. In the
stage, defective or damaged goods are returned to the supplier by the customer.
Here, the companies need to deal with customer queries and respond to their
complaints etc.
LEVELS OF SUPPLY CHAIN MANAGEMENT
Strategic Planning
Strategy level supply chain decisions are usually the first step of developing a good
process. Every effective supply chain strategy begins with solid long-term
decision-making. The strategy level lays the groundwork for the entire supply
chain process, from beginning to end, and is an essential part of supply chain
management.
Tactical Management
Businesses make short-term decisions involving the supply chain at the tactical
level. At the strategy level, general planning begins, but processes are actually
defined at the tactical level. Tactical decisions play a big role in controlling costs
and minimizing risks. At this level, the focus is on customer demands and
achieving the best end value.
The Operational Level
The operational level of supply chain management is the most obvious. These are
the day-to-day processes, decision-making, and planning that take place to keep the
supply chain active.
IMPORTANCE OF SUPPLY CHAIN MANAGEMENT