Supply Chain 4.0 is transforming the way Supply Chains operate. Supply Chains can become more efficient, effective, and secure by using new technologies Some of the key technologies used in Supply Chain 4.0 include big data, blockchain, Artificial Intelligence, and the Internet of Things (IoT). Big data is being used to collect and analyse data from all parts of the Supply Chain. This data can improve decision-making, optimise processes, and predict demand. AI is being used to automate planning, scheduling, and forecasting tasks. AI can also identify patterns and anomalies in data. IoT is being used to connect devices and sensors in the Supply Chain. This connectivity allows for real-time monitoring and data collection. Blockchain is being used to create a secure, decentralised record of transactions. This can be used to track goods throughout the Supply Chain and ensure the authenticity of products.
Supply Chain Management Process, Steps & Working
Supply Chain Management Process, Steps, & Working
Effortlessly completing any operation requires a systematic flow of consecutive tasks to optimally utilise resources and eliminate wastage. An Impeccable workflow equates to excellent profits for companies and greater customer satisfaction. The right Supply Chain Management process helps businesses address this challenge.
What is Supply Chain Management and Supply Chain Management Process?
Supply Chain Management (SCM) encompasses the entire production flow of goods or services, from the raw components to the final products delivered to consumers.
SCM is responsible for ensuring that all aspects of production are coordinated and functioning efficiently to minimise costs while maximising profits and customer experience.
This process includes all steps involved in acquiring, manufacturing, and delivering a product or service to the customer.
How Does Supply Chain Management (SCM) Work?
Supply Chain Management involves the coordinating and handling all activities associated with sourcing and procurement, production, distribution, delivery, and Customer Service. SCM aims to improve the efficiency and economisation of Supply Chains by centrally controlling or linking critical production, shipment, and distribution processes of the supply chain stages.
Every company has its own Supply Chain Management process, which may be more or less complex based on the scope and nature of the business. However, all Supply Chain Management processes share some common elements, which we will discuss next.
5 Parts of SCM
There are five parts or stages of Supply Chain Management. Each stage is essential to the success of the Supply Chain and the overall business. In this blog post, we'll take a closer look at each stage and what it entails.
Planning
It means figuring out what goods or services need to be produced and what quantities. It also involves deciding how these products will be acquired or manufactured, and where they will be delivered.
Sourcing
The process of acquiring the necessary raw materials and components for producing the desired products.
Manufacturing
It is the step for turning raw materials into finished products.
Distributing
It is the process of getting products to customers, whether through retailers or direct to consumers.
Return
The final stage of the Supply Chain is taking care of the customer. It includes dealing with any problems, complaints, or returns, and ensuring that the customer is happy with the product and the overall experience. It is often referred to as reverse logistics in the Supply Chain Management process.
Benefits of Supply Chain Management
There are several benefits of maintaining a stringent practice of Supply Chain process as follows:
Better collaboration
By streamlining the Supply Chain process flow, businesses can improve communication and coordination among all stakeholders. It helps organisations to better collaborate with their suppliers and customers. It, in turn, leads to increased efficiency and reduced costs.
Improved quality control
A vital part of any business is quality control. It's essential to ensure that products are manufactured to spec and meet customer requirements.
A good Supply Chain Management process is essential for ensuring the quality of products and services. By improving the quality control at each stage of the Supply Chain process, businesses can minimise the chances of defective products reaching customers.
Higher efficiency rate
The main goal of a Supply Chain Management process is to improve the efficiency of the Supply Chain process so that businesses can deliver goods and services to customers as quickly and as cheaply as possible. Companies can achieve this goal by improving the flow of information and goods through the Supply Chain process and optimising each stage's performance in the process.
Keeping up with demand
Perhaps the most profitable benefit is that it allows businesses to keep up with demand. By having a well-organised Supply Chain process, companies can quickly respond to changes in demand and avoid stockouts. It enables enterprises to meet customer needs and maintain a competitive edge.
Shipping optimisation
A robust Supply Chain process helps businesses answer questions such as what type of transportation to use, what kind of packaging is needed, and how best to store the product or service.
Improved risk mitigation
Supply Chain Management processes can help businesses mitigate risks, improve efficiency and optimise costs. By understanding the different parts of the Supply Chain process and how they work together, businesses can better identify risks and opportunities for improvement.
Lowered Costs
By coordinating and managing all parts of the Supply Chain process, businesses can reduce waste and inefficiencies. It results in lower costs for raw materials, transportation, and labour.
Increased Revenue
A company can save money on production costs and increase its profits by streamlining the Supply Chain process and making it more efficient.
Asset Utilisation
Asset utilisation is one of the key benefits of the Supply Chain Management process. By optimising the utilisation of assets throughout the Supply Chain, businesses can improve their overall efficiency and productivity.
Functions of Supply Chain Management
The Supply Chain Management process involves managing the flow of information, materials and finances as they move through the Supply Chain. Supply Chain Management aims to deliver the correct goods and services to the right customers within the promised time and at the right price.
Here are some key functions of Supply Chain Management:
Purchasing
Purchasing involves assessing needs, researching suppliers, negotiating prices and terms, and placing orders. The purchasing process is an integral part of Supply Chain Management because it helps ensure that the company has the necessary materials and supplies to meet customer demand.
You may explore various procurement solutions before settling on what is best suited for your business.
Operations
The operations function of SCM is responsible for carrying out the day-to-day activities involved in managing the Supply Chain. It includes forecasting demand, procuring materials and products from suppliers, managing inventory, and shipping products to customers.
The operations function works closely with other functions within SCM, such as the planning and control functions, to ensure that the Supply Chain runs smoothly.
Logistics
Logistics, in the Supply Chain Management process, helps ensure that goods and materials are delivered to customers in a timely and efficient manner. There are four main supply chain stages of logistics: transportation, warehousing, inventory management, and customer service.
Resource Management
One of the most critical goals of SCM is to ensure timely delivery of goods and services to customers. To achieve this, SCM must coordinate the activities of all stakeholders involved in the Supply Chain, including suppliers, manufacturers, distributors, retailers, and end customers.
Information Workflow
Information flow is a vital part of each stage in the Supply Chain. After all, if the various parts of the Supply Chain can't communicate, then the whole system breaks down.
Different Types of Supply Chain Management Processes
Supply Chain Management (SCM) manages the flow of goods and materials throughout the Supply Chain. However, there are several types of SCM processes. Each of these processes has its unique characteristics and is suitable for different kinds of businesses as follows:
Demand Management
This SCM process is responsible for ensuring that customer demand is met. It involves managing the flow of orders from customers and the distribution of products to meet those orders.
Supply Management
Supply Management or Make-to-stock (MTS) is the most common type of SCM process. It is typically used by companies that produce products that are in high demand.
In an MTS process, goods are manufactured and stocked before customers place an order. This type of SCM process is suitable for companies with a good understanding of customer demand and can accurately forecast future demand.
Sales and Operations Planning (S&OP)
The Sales and Operations Planning (S&OP) type of SCM is responsible for planning and managing the flow of materials, information, and money between different parts of the Supply Chain.
The main goal of S&OP is to ensure that the right products are produced at the correct time, in the correct quantities, and delivered to the customers who need them.
S&OP is a continuous process that is constantly being updated as new information becomes available.
Product Portfolio Management
Product portfolio management is all about managing a company's products as a group. This process helps businesses decide which products to produce and sell and when and where to sell them.
Parts Of A Supply Chain Model
There are several integral parts to a Supply Chain Model as follows:
Customer Relations Management
Customer relations management (CRM) is the process of managing customer relationships. It includes marketing, sales, customer service, and billing activities.
The goal of CRM is to create and maintain a good relationship with customers. It is done by providing them with the best possible experience.
CRM also helps businesses keep track of customer data. This data can help improve marketing efforts, target sales, and provide better customer service.
Customer Service Management
By definition, the Supply Chain Management process encompasses the flow of goods and services from supplier to customer. Customer Service Management, then, manages the interactions between customers and businesses to ensure that customer needs are met.
Demand Management Style
It entails forecasting future customer demand and ensuring that the Supply Chain meets this demand. There are two main methods of demand management: the push method and the pull method.
Push Method |
Pull Method |
Production is based on forecasts of future demand. |
Production is based on actual customer orders. |
It may lead to overproduction or underproduction. |
It can be more efficient as it reduces the risk of overproduction or underproduction. |
It can be used to meet seasonal demands. |
It can lead to stockouts if demand exceeds supply. |
Order Fulfilment
Order fulfilment ensures that an order is complete and accurate and that all the necessary steps have been taken to prepare and ship the order to the customer.
There are four main parts to any order fulfilment process:
- Order management: It includes taking an order from a customer, ensuring that it is complete and accurate, and then sending it on to the next stage in the fulfilment process
- Inventory management: It means tracking and managing the inventory levels of all the products and parts required to fulfil an order
- Shipping and logistics: This process ensures that an order is shipped to the customer on time and in perfect condition
- Customer service: Ensuring that the customer is happy with their order and providing them with any assistance they may need
Manufacturing Flow Management
Manufacturing flow management is managing the flow of materials and information through the manufacturing process.
Manufacturing flow management aims to ensure that the manufacturing process runs smoothly and efficiently and that finished products meet customer requirements.
Supplier Relationship Management (SRM)
It is managing interactions with suppliers to get the best value for your company.
SRM includes all aspects of the relationship between your company and its suppliers, from initial contact to supplier performance evaluations.
Product Development and Commercialisation
Product development and commercialisation are two important parts of the Supply Chain. Understanding the steps involved in each process is essential to ensure a successful product launch.
The first step in product development is market research. It helps to identify potential customers and understand their needs. Once the target market is identified, the next step is to develop a product that meets their needs. It involves creating a prototype and testing it to meet all required standards.
After the product has been developed, the next step is to commercialise it. It includes creating marketing materials and strategies and developing a sales plan. It is also important to develop a distribution strategy to ensure that the product is available to customers when they need it.
By understanding the steps involved in product development and commercialisation, companies can improve their chances of success when launching new products.
Returns Management
One of the essential parts of the Supply Chain is Returns Management. Returns management is the process of handling products that customers return. It can include anything from repairing or replacing the product to issuing a refund.
Returns Management is a vital part of the Supply Chain because it can significantly impact customer satisfaction.
There are several steps in the returns management process:
Returns Management Steps |
1. Receiving the return |
2. Inspecting the return |
3. Processing the return |
4. Shipping the return |
Supply Chain Management process Vs. Supply Chains
SCM and Supply Chains are very similar in nature, but there are a few differences between SCM and Supply Chains:
Supply Chains |
Supply Chain Management |
A Supply Chain is a well-connected network of facilities and resources that work together to produce and deliver a product or service. |
SCM is a process that coordinates and optimises all parts of the Supply Chain - from raw materials to finished products - to meet customer demand. |
Supply chains are complex networks that link from manufacturer to distributor and ultimately back down to you. |
The goal of SCM is to improve efficiency and effectiveness throughout the Supply Chain. |
Supply Chain Management Best Practices
Real-Time Supply Chain Planning
Real-time Supply Chain planning is the ability to track and respond to changes in your Supply Chain as they happen. It means having visibility into every stage of your operation, from raw materials to finished goods, and being able to make changes on the fly to keep your production moving.
In a world where global Supply Chains are becoming increasingly complex, real-time planning is essential for businesses that want to remain competitive. Responding quickly to changes in demand or the marketplace can help businesses avoid disruptions to their Supply Chain and keep their production moving.
However, real-time Supply Chain planning is not without its challenges. Coordinating the different parts of a Supply Chain can be difficult, and making changes on the fly can be difficult without the right tools. But with careful planning and execution, real-time Supply Chain planning can be a powerful tool for businesses of all sizes.
Unification of Supply Chain Planning and Enterprise Planning
It's important to ensure that all the different parts work together seamlessly to get the most out of your SCM system.One way to do this is by unifying your Supply Chain planning with your enterprise planning. Enterprise planning means setting and achieving strategic objectives across an organisation. By aligning your Supply Chain planning with your enterprise planning, you can ensure that your Supply Chain is working towards the same goals as the rest of your organisation.
Anticipate The Demand Of The End Customer
In the Supply Chain Management process, it's essential to anticipate the demand of your end customers. It will help you ensure that your Supply Chain can meet their needs and avoid any disruptions. There are a few parts of the Supply Chain Management process that are key to consider when trying to anticipate customer demand
- The Supply Chain flow: The movement of goods and materials through the various parts of the Supply Chain, starting from suppliers to manufacturers to distributors and finally to retailers
- The Supply Chain steps: A few steps in the Supply Chain process need to be managed to ensure smooth operations. These steps include procurement, manufacturing, logistics, and distribution
- The Supply Chain Network: This refers to the relationship between the various parts of the Supply Chain, including suppliers, manufacturers, distributors, and retailers
Leveraging Real-Time Data Across All Points Of The Supply Chain
Leveraging real-time data across all points of the Supply Chain can help organisations keep track of inventory levels, optimise production processes and manage customer expectations more effectively. In today's fast-paced business environment, having visibility into the entire Supply Chain is critical to success.
Ensure Flexibility To Cope With Change
The strength of a Supply Chain is determined by the strength of its weakest link, so one must ensure that every part of the process is efficient and can adapt to change. It can be a challenge, as the Supply Chain is constantly evolving. But with the right planning and execution, businesses can ensure that their Supply Chain is flexible enough to cope with change.
The first step is to understand the different parts of the Supply Chain and how they work together. It will help you identify potential bottlenecks and areas where changes are possible to improve efficiency.
Next, you need to develop a plan for how the Supply Chain will operate. This plan should consider the different parts of the Supply Chain and how they interact with each other. It should be able to allow for changes in the future.
Why Is a Supply Chain Management process Important?
The importance of SCM cannot be overstated.
- It helps companies to control manufacturing processes and ensure product quality.
- By shipping efficiently and avoiding shortages or oversupplies, the Supply Chain Management process can improve customer service while also increasing profits
- It encompasses all the steps involved in getting a product from the supplier to the customer, including sourcing, manufacturing, warehousing, and transportation
- Streamlining of the Supply Chain and making it more efficient can help companies save money and time while also ensuring that products are high quality.
- Implementing a successful SCM strategy requires understanding all the steps involved in the process and the ability to manage each one effectively
- With the help of Supply Chain Management processes, companies can gain a competitive advantage by ensuring that their products are available when and where they are needed
- By managing the Supply Chain effectively, companies can improve their bottom line and create a more sustainable business
Examples of the Supply Chain Management Process
Supply Chain Management is coordinating all activities necessary to produce and deliver goods or services. Examples can include designing, farming, manufacturing, packaging, transporting etc.
It's important for companies because they need to organise their Supply Chains correctly if there are any issues along the way, so everything doesn't come crashing down on them!
Advanced Planning and Scheduling (APS) Software
As anyone in a Supply Chain Management process will tell you, efficient operations depend on having the right parts and materials on hand when you need them. That's where advanced planning and scheduling (APS) software comes in. APS systems are designed to help companies plan and schedule their production processes more effectively, resulting in a leaner, more agile Supply Chain.
APS systems are a part of the larger category of Supply Chain Management (SCM) software. SCM software is used to plan and manage the flow of goods and materials through the Supply Chain, Supply Chain, from raw resources to finished products. APS systems can optimise production planning and scheduling, two of SCM's most essential and challenging aspects.
How can Amazon Business help in your Supply Chain?
Amazon Business can help you optimise your Supply Chain by providing a platform for:
- Understanding parts of the Supply Chain
- Mapping out the Supply Chain Management Flow
- Analysing the Supply Chain Steps
- Implementing Changes in the Supply Chain
By following the abovementioned points, you can improve the efficiency of your Supply Chain and save time and money.
Conclusion
Having a well-managed Supply Chain is critical to the success of any business. By understanding the parts of the Supply Chain Management process and following the Supply Chain Management flow, businesses can ensure that they get the most out of their Supply Chains.
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