An Introduction To Supply Chain Management

By Author: Simon Lewis
Total Articles: 7
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A supply chain is a network of facilities and people performing the procurement and transportation of materials into intermediate and finished products. This network also takes care of distributing these finished products to the customers. The supply chain includes not just the manufacturers and suppliers. It also involves the transporters, warehouses, retailers, distributors, and the customers themselves. Supply chains exist in both the service and manufacturing industries, although the complexity of this chain varies from industry to industry.

For instance, consider a customer walking to a grocery store to purchase some detergent. The supply chain begins with the customer needing detergent. The next stage of this supply chain is the grocery store stocking its shelves with inventory supplied from a finished-goods warehouse that the grocery manages or from a third party distributor. The distributor is in turn stocked by the manufacturer of the product, who receives raw materials from a variety of suppliers.

Traditionally, manufacturing, marketing, sales, purchasing, and the distribution departments operated independently. ...
... They, however, often have their own objectives which most of the time are conflicting. Marketing and sales’ objective of high customer service and maximum sales often contradict manufacturing and distribution goals. Many manufacturing operations are designed to maximize costs with little consideration for inventory levels and distribution capability.

The result is that there is often no single, centralized, and integrated plan for the business or organization. Clearly, there is a need through which these different functions can be integrated. Supply chain management is a strategy with which such integration can be achieved. Coordination between the various supply chain management jobs is the key for efficiency.

Supply chain management activities are typically classified into three categories: strategic, tactical, and operational. Strategic activities include building relationships with suppliers and customers, and integrating technology to smoothen business operations. Studying competitors and making decisions regarding purchasing jobs and delivery fall under the tactical category. The operational category includes the daily management of the supply chain, including the supervision of the production schedule.

Most recruiters toronto companies trust use forecast-distribution models to have the necessary inventory to meet fluctuations in consumer demand. This helps companies maintain a more efficient and therefore more effective supply chain management. Under this model, participants in the lower-end of the supply chain increase their orders when there is a rise in demand and decrease or stop their orders when demand drops to prevent excessive inventory.