While running a business many things has to be taken care of so that business should run effectively and smoothly, managing many things take a lot of effort and you always has to be on the toes.
Salary of the employees, raw material, marketing and many others things plays an important role in successful business, out of many things the most important is supply of raw materials and distribution of the finished goods and services. Supply plays an important role in growth of the company and once you get the proper supply and an effective distribution than you get the competitive advantage in the market.
Supply Chain Management is very important and necessity to run the operations smoothly, supply chain management is little complicated but if managed properly than supply chain management will be one of the pillar of your success, lets understand what is supply chain management.
What is Supply Chain Management?
Supply of the raw material to transform the raw material in to finished goods and services and then distribution of the goods and services to the customers, this process is supply chain management. In a nutshell we can say that the process from raw material to finished goods and goods to the customers this method of supply is supply chain management.
Supply Chain Management is a complex and expansive process, managing the supplier of the raw material and goods and services to the market effectively will impact on our business positively and helps the company to grow as per expectations. Supply chain management is not only about the logistics and purchasing the inventory however minimizes the shortage of the raw material and keeping the low cost of the raw material is the output of the properly managed supply chain.
Supply Chain Management has 5 parts, let’s take a look into that
- · Strategy
Companies need to strategize and manage the supply chain to fulfill the needs of the market, strategy involves the designing the strategy in such a way that supply chain is efficient and effective to get the desired results.
- · Sourcing
Companies must choose the vendors to provide the raw material to produces the finished goods and services. Once the company chooses the vendors and starting working with the selected vendors companies used many plans to manage the goof relationships with the vendors. Ordering the raw material, receiving and making the payments come under the sourcing.
- · Manufacturing
Company manages all the activities from accepting the raw material, manufacturing the products, quality, packing and delivery of the products.
- · Delivering
Some call it logistics, this involves orders, dispatching, invoicing and receiving the payments. Some companies outsource it the companies who are expert in delivering the products and doing the hoe delivery.
- · Returning
If the product is defective or excess and not unwanted than effective process of returning is very important, if the product is defective it has to be scraped and excess and unwanted has to be return to the warehouse.
These five steps involved in supply chain make the supply chain effective and smooth.
Types of Supply Chain Management Model
Here are the six supply chain management models,
- · Continuous Flow Model
The continuous flow model is to fulfill the high demand, where manufacturer create the same goods again and again. This model is good for commodity production.
- · Fast Chain Model
This model works for the manufacturer who produces the products that are trending in the market and has very short life. If you are in a business where you change the products very quickly and want them out from the factory very fast.
- · Efficient Chain Models
This model is good for the company who are into very competitive market and quality of the product matters the most.
- · Customer Configured Model
This model is for the manufacturer who produces the products as per the need of the customers or customizes products.
- · Agile Model
This model is good for the company when they produce the specialty order items.
- · Flexible Model
The flexible model is good to meet high demand for a long time.
Advantages of Supply Chain Management
- · Cost Effective
Supply Chain Management helps in reducing the cost big time, it helps in improve your inventory system and with the help of supply chain management you can use the warehouse space properly with the combination of finished goods and defective good, improves the relationships with your vendors and distributors and all these parameters helps in reducing the cost and you can improve the profit.
- · Higher Efficiency
When you implement the supply chain management and integrate receiving of the raw material and production and delivering the product in the market, if all such steps managed effectively the efficiency of the company goes up.
- · No delay in Process
Supply Chain Management helps in communication within the company effectively and everyone knows what they have to do and what others are doing, this will leads to no or less error in late shipment and distribution.
- · Higher Outputs
When supply chain management is implemented then communication is better as compared to before and cooperation and collaboration with the vendors and transport company will also get improved.
Supply Chain Management is one of the most important processes for the growth of the company, coined in 1982 by Booz Allen Hamilton. Since then supply chain management is giving the good and expected results to many companies and helping the companies to grow as per the plan,
Supply Chain Management is little complex process and if implemented properly than it can be the game changer for the company, as it is said it complicated process however technology is making it simple and easy to implement. There is much software which is very beneficial for the large companies who want their supply chain management more efficient.
Supply Chain Management helps the companies to gain the competitive advantages in the market and helps in reducing the price, supply chain management helps in achieving happy vendors, happy customers and happy distributors.