Supply chain Management
A supply chain is an incorporated process involving a number of business entities including manufacturers, suppliers, retailers and distributors come together in an attempt to obtain raw materials, turn the raw materials into the desired products and distribute the products to retailers. A supply chain is usually characterized by a forward movement of materials and a backward movement of information. For years, the processes involved in a supply chain have been researched, but the focus is now shifting to the performance, analysis and design of the entire supply chain.
At the highest level of a supply chain, there are two basic processes: The first process will include planning for production and control of the inventory while the second process will include logistics and the distribution process. The planning production process primarily describes the activities taking place in manufacturing while the control of inventory will describe the storage policies and how it is managed.
The logistics and distribution process deal with the retrieval and transportation of the final products to retailers. The transportation may occur in two ways: the products may be transported directly to retailers or they may be transported to distributors first who will later distribute to the retailers. All the above processes interact with each other to form an incorporated supply chain. The design of the supply chain and its management are what will determine the success of any supply chain. In an era where the supply chain is becoming more complex and dynamic, organizations should consider supply chain design as a core skill and implement it fully. A good supply chain design will focus on distributing products in a way that increases profitability and the value of the shareholder. Every company should focus on the markets and outsourcing strategies that will be able to improve its financial performance. Another important thing will be to understand how products and services will be distributed and the destination point.
Many companies experience the challenge of meeting the customer needs, forecasting the demand pattern, and making sure that products reach the right customers and at the right time. When coming up with a good supply chain design, the following factors should be considered:
- Outsourcing the design- In standard occasions, a supply chain is thought to begin after a product has been manufactured by the manufacturer while in reality; the manufacturing process is the first stage in the supply chain process. Including outside expertise from people who will be involved in the supply chain at later stages, will benefit the product hugely as the input may aid innovation and boost the market impact.
- Understanding the end customer- most distributors and retailers usually distance the manufacturers from the intended users of the products. When this happens, it becomes hard to understand the user’s preferences, design the product and forecast the demand pattern. Having access to the users is a factor that cannot be ignored when coming up with a good supply chain design, as it will help in optimizing the supply chain.
- Finessing the financing- With an era where bank terms have become stricter, it is better for any company to look for alternative financial sources when coming up with a supply chain design. A company can invite additional partners who offer capital through the financial agreements made.
- In cases where the products’ lifecycle is short due newer versions being introduced in the market, a company might consider future proofing the products by coming up with designs that can easily adapt to the changes. This will in turn prevent the delay of introduction of the product in the market.
- When developing products, many companies tend to focus most of their attention to the product requirements and specifications and forget about the transport aspect. Detailed transportation specifications should be put, in place, to avoid delays, avoid re-loading costs, ensure the route is efficient as well as reduce fuel waste.
- Lost and damaged goods cause inefficiency in the supply chain process. When coming up with a supply chain design, security and insurance should be factored in the decision. Putting in place inspection points and using sealed containers especially when shipping will prevent loss of goods. The goods should also be insured internationally in case their loss cannot be prevented.
- A good supply chain design should ensure that skilled people are incorporated in the supply chain and are on call at all times. From the design process till the end point where the consumer receives the product, the people involved should be responsible and good problem solvers.
The main purpose of a supply chain design is to determine if all the firms included in the supply chain are able to compete in the business environment. How a supply chain is designed, will greatly affect how the company and the products fare against the other competing products. Therefore, it is important for the above factors to be addressed when coming up with the design. Once all these factors have been addressed, a design team should be put in place. The team should include people within the company as well as outside such as the chosen suppliers, the intended customers, distributors and retailers. Once the team is in place, come up with a common goal or what the company wants to achieve. The next step will be to come up with a criterion to determine the performance of the supply chain. Some of the criterion may include the total cost quality and the product performance in the market among others.
When a company comes up with a good supply chain design and fully implements it, the design will ensure that the company utilizes it supply networks, the products reach the market faster, ensure the customers get the latest products and enable the company to compete with other companies effectively. The supply chain design will also help the company adjust well to the unforeseen threats in the business environment, as well as utilizing techniques that will be able to maximize profits and come up with solutions requiring less capital. The ‘what if’ scenarios and any assumptions made are re-evaluated which leads to risk management.
In order to maintain an effective supply chain design, every process in the supply chain may be analyzed, and ways to improve the process may be implemented. Regular review, changing and improving the supply chain as determined by the design team should be done so as to achieve the best results. An improvement program that is fully supported by the team members must be put into place so as to maintain the competitive advantages it offers the company.
References
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