SUPPLY CHAIN MANAGEMENT SYSTEMS
Today’s competitive business environment calls for companies to pay much more attention to how they manage their supply chains. Customers are insisting on greater value, faster order fulfillments, and more responsive service when they make purchases. Shorter product life cycles, global sourcing, and greater product variety have increased supply chain costs and complexity. The value chains of so many businesses are linked together that competitive advantage may be based on entire supply chains rather than individual firms.
Supply chain management refers to the close linkage and coordination of activities involved in buying, making, and moving a product. It integrates business processes to speed information, product, and fund flows up and down a supply chain to reduce time, redundant effort, and inventory costs.
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The Supply Chain
The supply chain is a network of organisations and business processes for procuring raw materials, transforming these materials into intermediate and finished products, and distributing the finished products to customers. It links suppliers, manufacturing plants, distribution centers, retail outlets, and customers to supply goods and services from source through consumption. Materials, information, and payments flow through the supply chain in both directions. Goods start out as raw materials and move through logistics and production systems until they reach customers. Returned items flow in the reverse direction from the buyer back to the seller.
Key supply chain management processes
Plan: Consists of processes that balance aggregate demand and supply to develop a course of action to meet sourcing, production, and delivery requirements.
Source: Consists of processes that procure goods and services needed to create a specific product or service.
Make: Consists of processes that transform a product into a finished state to meet planned or actual demand.
Deliver: Consists of processes that provide finished goods and services to meet actual or planned demand, including order management, transportation management, and distribution management
Return: Consists of processes associated with returning products or receiving returned products, including post delivery customer support. Logistics plays an important role in these processes, dealing with the planning and control of all factors that will have an impact on transporting the correct product or service to where it is needed on time and at the least cost. (Logistics accounts for 12 to 14 percent of a typical manufacturer’s cost of goods sold.) Supply chain management provides an opportunity to optimise the movement of materials and goods among different members of the supply chain.
To manage the supply chain, a company tries to eliminate redundant steps, delays, and the amount of resources tied up along the way as it manages relationships with other supply chain members. Information systems make supply chain management more efficient by providing information to help companies coordinate, schedule, and control procurement, production, inventory management, and delivery of products and services.