Dear readers, I am exclusively thankful to Ms. Margaret Rouse for enabling this write up.
While manufacturing any product item considering its demand and idea, there are a host of activities involved directing its planning, control and execution, beginning from raw material purchase to manufacturing to its circulation, but in the most optimum manner as feasible from financial and safety point of view. Now, when such activities are conceptually bundled and put into practice, such is called Supply Chain Management.
Not surprisingly, the concept and practice of SCM produces forth, a wide range of benefits as hinted above in terms of occupational efficiency, helps in greater profit generation, in curbing costs and also strengthens professional affiliations with other businesses, such as suppliers, transporters, delivery section etc, across entire network.
In the same way, demand handling turns out to be a hassle-free affair alongside diligence while optimum inventory management and disruption manipulation also gets more refined.
But such pleasing gains occur in stages and sequentially while such call for precise implementation of thought-out strategies, which are complemented by software precisely developed for such objectives and which is in typical light of supply chain framework of today.
From both perspectives, i.e. business enterprises involved in SCM framework in some way or the other as well as for consumers, there are holed up a range of benefits for either sides. Such as:
- Enhanced Customer Satisfaction:
No doubt, when accomplished effectively, customers’ favour can be garnered deeply as their required items are quickly delivered at the preferred location, resulting in customers’ loyalty drawn by it.
Clearly, when every activity is well though about and executed across SCM network, costs are controlled effectively, like costs incurred in manufacturing, inventory, purchase etc., which simply leads to robust financial position of a company. In the same sane context, insane utilization of major or durable assets such as vehicles, heavy handling equipment etc. and infrastructural dependence is reduced to not minimum but optimum. Likewise, even the human resource utilization gets better paving way for a smarter and happy workforce. For example as some companies have put-in in Canada, customer services can be quantified and hence can easily be measured and depending upon the demand and customer-base, a company may own 10 warehouses across the city or region, but can make five to six warehouses operational, thereby curbing costs associated with 10.
Nothing holding back, but job creation is always one of the central aspect of SCM system and employment grows at steady rate, provided everything takes place properly. In fact, there is a diverse array of job opportunities at different levels within scores of organizations. For instance, skilled drivers in delivery vans and their assistants, workers task with packaging as well as to manage inventory, warehouse supervisors/ managers to look after certain number of warehouses, production workforce, suppliers of raw material, distributors/ traders, retailers and so many forth. In fact, it won’t be false to assert that robust supply chain networks are the prime backbone of country’s growing economy and which lays the foundation of a sophisticated society and it includes railroads and highways connecting various cities and states and then we also have airports and seaports through which massive trade and commerce in various materials is materialized on global scale (and which sometimes becomes a bone of contention between countries, see CPEC project which has brought India and China on brink of war).
Returning back to CPEC, errrr…sorry to SCM, certainly such aforementioned infrastructure and their proper functioning are critical to seamless movement of goods and services and to allow consumers have easy access to essential items (such as medicines, food etc) and to easily avail required services and thereby contributing to economic growth and ensuring better living standards alongside.
Truth be told, SCM plays a dominant roles in social sophistication as every desired and required bevy of items from pin to plane, is provided easily and paves way for human survival.
Not surprisingly, when a product is manufactured, there are different processes involved, right from its semi-finished and raw-material state to the final developed product and such processes can be harped upon uniquely and categorized distinctly for easier grasp and to subject each function to critical analysis. Now, delving into SCM process, it originates right from figuring out exact product type to be designed and manufactured and to be launched eventually in the market following a detailed market analysis. In same course, one also has to harp upon possible marketing techniques and has to form formidable sales forecasts after which types of items and production quantity is determined. For such a purpose, scores of enterprises are putting Sales & operations Planning (S&OP) into use which an acknowledged broader process having a handful of specific tasks pinpointed such as gathering data and its analysis, developing demand plans and enabling proper production in quantity specified earlier and so forth.
Now surprisingly, the S&OP, at most occasions, is implemented in form of IBP (Integrated Business Planning), assimilating roles and responsibility of other divisions functional within an enterprise alongside a mega action plan which is acknowledged and implemented across the enterprise.
Enterprises zero in on the place where possible manufacturing is likely to take place and for sake of automation driven efficiency and quick decision making, Advanced Planning Scheduling software is utilized which is specific initialization for such a purpose which results in proper allocation and management of men, material and machinery and which also draws flexibility to act according to unforeseen circumstances.
Simply put, MRP is a standard process honoured by time, passing which manufacturers are assured about sufficient quantity of raw material and proper components constitute the principle asset in a company for sake of uninterrupted efficiency. In this sort of planning, inventory assessment is done, gaps and shortcoming are identified and any scant resource is purchased right away. In this regard, a specific document BOM (Bill of Material) is compiled enlisting necessary items needed for smooth flow of manufacturing process and such is also maintained under MRP.
Many a time, MRP is mingled with another MRP, this time, Manufacturing Resource Planning and we would identify it as MRP-2 and which is an even wider aspect of MRP only to bring other divisions within a company into its fold, such as HR and finance. To put is easily, the origin of ERP (Enterprise Resource Planning) software can be traced in MRP and MRP-2, through which diverse parts and processes within an organization are integrated into unified and easy-to-use software, with the objective of initiating quick and fruitful decision making once key analysis of every single process is done.
Among various steps planned and initiated by SCM, two critical processes need special mention and analysis, i.e. inventory management and logistics care. Under the former, scores of techniques aided by mathematical formulae are put in in order to reflect proper supply and raw material in a manufacturing unit is also quantified under MRP system since companies face many issues concerning to raw material, while only an integrated software can guide to glory.
Running into logistics, such is related to transportation and storage of goods, in fact, this is planned right in the beginning of supply chain, when raw material is supplied to manufacturing plants following which, finished goods are delivered at retail stores or to directly forwarded towards end consumers. Here, reverse logistics term has also come into play which is related to how products are managed for recycling. However, inventory management concept is said to be identical across all logistics processes.
Procurement, also referred to as sourcing, is the multi pronged process related to:
- Hunting down good goods supply sources,
- Strengthen such relationships with established and reputed suppliers,
- To strive for cost effective supply of goods and the paper and desk work invested thereby.
Needless to mention but all of the significant communication taken place during the process, also constitute its part such as invoices, purchase orders, bank drafts and cheques and so forth.
Clearly, the developers and coders of any standard SCM as well as its application software, have realized the worth of all such factors while developing the software as one can easily come to know about the items for which purchases are made, their quantity, number of items sold at what retail centres, revenue earned, tax deductions, cost involved and the like.
As a matter of factly, in typical supply chain, suppliers, manufacturers, distributors and retailers, all maintain staff exclusively for procurement purpose.
The term refers to high-end procurement form which is attempted to overhaul an organization’s sourcing capability, when its sound purchasing power is utilized with diligence only to create a fine-tuning with key business objectives by considering the overall goals.
Now, we have Supplier Relationship Management (SRM), the system bearing responsibility of keeping a vigil upon suppliers who are extremely crucial to business success and relentless efforts are made to consolidate powerful relationship with them, certainly in a hot pursuit of putting up a great business performance.
Logistics Taking On SCM:
Logistics is just an aspect of SCM, which decides and directs the movement of material in the best possible way, so as to enable it to reach right point within perfected time frame. Looking further, tasks like packaging, transportation, distribution, warehousing and delivery, all fall into this category.
Now, shifting glance at the other side, SCM is a broader aspect of the game and includes useful functions like locating strategic sources of raw material, obtaining goods at agreeable prices and collaborating with other players in SCM bubble only to accomplish set targets and to pursue goals and objectives easily.
Sailing towards the main point of study in today’s SCM network and drifting towards its management which is completely inundated with automation, it is indeed astonishing to note that every large-scale process in this framework comes with a software category starkly bent towards this side. In most of the ERP software offered by the notable vendors counted in thousands, there is a software category distinctly falling towards SCM module.
Other than assisting in efficient process management, SCM software is also useful in combining men and processes with the system who are at the core of Supply Chain framework.
Playing defining role, there are certain other modules in SCM software:
- TMS: Transportation Management System which looks after the handling, transportation and looks into storage of goods but on a bigger global scale,
- WMS: Referring to warehouse management system finds central place in SCM enterprises to look after the warehouses and restructure distribution points,
- OMS: System for Order Management, put into use to ensure hassle-free processing of customer orders by WMS, ERP and TMS systems and the programming is diligently done to ensure at any stage of Supply chain, order processing could take place.
In today’s period which is immensely marked by a global web in this arena and as e-commerce gets a boost, thanks to premium software technologies, and we see quick delivery of wide range of goods (from pin to any large durable set for any purpose) there are typical challenges bound to surge, such as demand planning as well as for refined logistics. As a result, unprecedented strategies have been implemented like lean manufacturing coupled with bizarre approaches (but which really work though), like we see material assessment as per demand and so many more.
Novel Technologies Have Come Into Existence In SCM:
An armful of technologies are widespread like Big data, predictive analysis, IoT, analytics designed exclusively for supply chain, robotics and self-driven vehicles, drone delivery etc, which are pressed into service to meet the modern day challenges while considering associated risks and sustainability. No need to say that most such technologies come with similar set of objectives that is to collect useful data to further enhance supply chain network and to devise actions accordingly.