Supply chain management is the process through which organizations monitor the process that is involved in the production of goods and service, right from their raw material stage to when they come out as finished products and finally consumed by the end user. Right from inception to the use of a product, some processes take place, and for a business to ensure efficiency and minimize waste, it is necessary to monitor the process.
Supply chain management is a tool used to create value for the product and establish an infrastructure which is competitive and puts the brand in a strong position. As the efficiencies in the supply chain increase, the cost involved in the productions are reduced this in turn lowers the costs to the consumer. Therefore, highly efficient processes are a chance of improving the market structures and increasing overall output of goods and services. Supply chain control goes through the following stages.
THE FIVE STEP PROCESS
- Plan. Is crucial for every business, and it determines the profitability in the ventures that the company carries out. The company must establish a blueprint in their mode of operations, decisions such as whether to manufacture a component or buy it from a supplier are decisions that will impact the business profitability. Identifying the areas to establish the plant, mapping out transportation routes, establishing communication plans that align with the company’s goals, all this are fundamental in developing a set of metrics for the supply chain.
- Source. This stage the business focuses on building a healthy relationship with the suppliers that will be involved in bringing in the raw materials. This process can be very challenging since many aspects need consideration like their mode of delivery; would it be efficient to meet production schedules, also the suppliers need to be reliable who can be depended on to deliver. At this point the business establishes the pricing and modes of payment for the suppliers also a metrics in monitoring the process to ensure quality standards are maintained.
- Make. In this stage the business produces that product the customer demands from them, after they are made they are tested, packaged then released. This is the most metric intensive part of the chain because the output would be as a result of the input in terms of workers’ productivity. For purposes of reference and comparison, data storage is crucial.
- Deliver. This is the logistics phase where the goods are delivered to the consumer. Here the company has a responsibility to ensure the products get to the customer in the right form, quantity and at the right time. The company can also engage in fleet management to monitor the delivery process. An invoicing system is established at this point to record the business transactions.
- Return. This stage the company handles the customer queries and responds to their feedback, the defective or damaged products are returned to the supplier. For a business to be successful this process should be as seamless as possible because the customer is already disappointed in their order.