Supply Chain Management

Rising operating costs primarily due to the upward trend in the global economy companies try to operate efficiently so that the costs are reduced and controlled effectively. The main goal of today’s corporations is to reduce uncertainty, operating costs and providing customers with a quicker response as compared to a slow response. In doing so, companies try to manage their working capital and operating cycle time diligently. Similarly managing and reducing risks in the supply chain, managing inventory and warehousing, improving production through-put to ensure better response to customers’ demand.

The benefits of a supply chain management have long been felt and seen by many in today’s ever-changing and competitive business environments. So much that efficient and effective supply chains are critical to the survival of most moreover; these supply chains rely heavily on support from dynamic information systems and ERP tools.

The function of the Supply Chain Management is to plan, organize and coordinate the supply chain activities. Today, supply chain management is a total systems approach to managing the entire supply chain

The Three Flows of a Supply Chain

Supply chain is the precision in arranging goods and services from their source, adding value and delivery to the customer. The Supply Chain encompasses the flow of materials, services, information and payments from raw materials to factories through warehouses to the end user of the product or service.

Materials, Information & Finances

1. Materials mean the flow of materials from the suppliers to the factories, the internal movement within factories based on the production planning and into warehouses as finished goods and ultimately from the logistics to their distribution and delivery to the end user

2. Information of all the activities generated within the company should be available in time and accurately so that the company can better plan its production and make efficient use of its resources

3. Finances include information regarding all payments, bank-transfers, E-payments

Components of a Supply Chain

The supply chain also includes companies and processes that add-value by processing, enhancing product life/quality and also by delivering products to the end user. It is a close-knitted network of activities that delivers the product or service to the end user.

It includes, purchasing, payment flow, materials handling, production planning and control, logistics and warehousing, inventory control, distribution and delivery

Supply chain is more or less a vertical movement of unless there is a need to undergo processing to add value to the deliverable product. Upstream is when sourcing or purchases from external suppliers takes place; internal, when the company itself or any of its partners in the supply chain add value to the product or service by virtue of processing, assembly, and packaging; similarly, downstream, where distribution to customers takes place, frequently by external distributors, or a disposal takes place.