Question & Answer: What is supply chain management? give example and thoughts…..

Supply Chain Management refers to the entire process of flow of material, goods, services and information from point of origin to the point of destination and vice-versa. The chain of the activities from suppliers to customers is called supply chain.

The basic flow in a supply chain is as follows – Supplier –> Manufacturers –> Distributors –>Retailers–>customers

Supply Chain can be best explained through the Supply Chain Operations Reference(SCOR) model which consists of the below processes in sequence –

1. Plan – Through this process, the firm plans for the supply of material and resources based on the forecast and actual demand. The product is build through a bills of material at various levels. Planning also includes lead time calculations apart from capacity calculations and material allocations.

2. Source – Based on the material requirements plan, the firm initiaties procurement process for the purchase of raw materials from the suppliers. Off late, firms have been increasingly employing strategic sourcing and supply management to obtain raw materials at relatively lower costs, receive the products in time and ensure quality of the material received. The material received is stored as raw material inventory at the receiving warehouse or manufacturing plant.

3. Make – Once the raw material is received at the plant, the firm executes manufacturing process to add value to the raw materials and convert them into finished product with equipment and manpower as resources. The intermediate goods in a manufacturing process are called work-in-process goods. At the end of the manufacturing process, finished goods inventory is stored at the plant.

4. Deliver – The finished products manufactured from make process are delivered to customers based on the sales orders received. Fill rate and customer service level are the critical metrics in this process. The firms employ third and fourth part logistics firms to distribute the products.

5. Return – This process involves returing of defective and expired products from customers back to the firm which are disposed once received back into the firm’s inventory. The process requires reverse logistics to move back the goods to the point of manufacture.

The typical material flow is from suppliers to manufacturers.

The typical information flow is from customers to manufacturers to suppliers

The typical flow of goods is from manufacturers to customers.