What Is A Supply Chain Processing?

Supply chain management identifies the entire process involved in moving goods from point A to point B. It includes all steps that convert raw materials into finished goods and ultimately creates a positive feedback loop or cycle. Thus it includes the key driver of an organization's profit and loss generation. If the supply chain is managed well, the process will minimize business costs, which will lead to increase in profits for the organization. However, if the supply chain is poorly managed, organizations may suffer a lot of losses.

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The supply chain functions in a simple way. At the beginning, there is a supply chain setup where raw materials like energy and minerals are being sourced from quarries or mines. Once these raw materials are used in the manufacturing process, they are then moved to factories where factories produce goods. Products are then stored in inventory, ready for when they are bought by consumers.

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But how does supply chain management affect the organization? For one, it can directly affect the production as well as the supply chain management itself. One example is with supply chain management in the pharmaceutical industry. If logistics are not properly managed, products will not be correctly distributed to dealers. In turn, when consumers do get the drugs they need, it will not be at their preferred pharmacy or at the right price.

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An understanding of the supply chain will also help companies understand the impact of their supply chain decisions on their inventory and on their ability to meet customer demands. Supply chain is directly related to supply chain management and the operational concept that handle the flow of materials through a supply chain. The concepts are interrelated and dependent upon each other.

Critical Chain Project Management Methodologies

For the supply chain to work best, there must be consistency between supply chain processes and activities. There should be a close link between the production of a product and the marketing of that product. And then there should also be a link between the supply chain processes and the activities of marketing. Both must be linked to customer demand. Thus, when a company sells a product that has been manufactured at its own factories, it must be able to provide enough supply at the lowest possible prices to make its sales volume successful.

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This process of supply chains needs to be properly linked to the operations of transportation. Logistics refers to the processes involved in transforming raw materials into finished goods. Transportation then enables manufacturers to bring their finished products from manufacturing plants to their destinations. Thus, proper logistics processes go hand in hand with transportation.

Defining and Implementing Supply Chain Planning

Some supply chain elements that need to be considered are product demand, logistics, distribution centers, delivery and finally delivery. These processes are interconnected and work together to ensure that manufacturers get the products they produce to their customers on time. The basic logistics system would involve production, transportation and final delivery. At each stage, one or more of these tri-level groups need to take responsibility for ensuring that things run as planned.

What Is Demand Driven Supply Chain Planning?

One important aspect of the supply chain is distribution centers. In simple terms, distribution centers act as the hub of activity for manufacturers. Distribution centers not only act as points of call for manufacturers, but also acts as a warehouse for finished goods. In order to have a smooth distribution process, both manufacturers and distributors need to find a way of organizing their warehouse so that they can meet supply and demand needs. And the most effective way of doing so would be by forming a partnership, wherein the manufacturer would distribute the goods manufactured by the distributor, and the distributor would then take the goods to the end users, where they would be purchased.

You can also read : Improve Your Supply Chain Analysis