Supply Chain
Supply management is a critical element in understanding business operations. Supply Chain Management (SCM) is the oversight of finances, materials, and information when the movement happens from supplier to manufacturer, wholesalers, and retailers and at last reach to customers via defined procedures. Here, we will discuss all the processes among companies and within a company through the supply chain.
Supply Chain Management Flow Chart
Product flow, information flow, and finances flow are the three main flows associated with supply chain management. Check the flow diagram of the supply chain given below that describes the different stages of supply chain management.
Stages of Supply Chain Management
Product Flow – The movement of goods from the supplier to the consumer and returns and other service requirements.
Information Flow – Transferring orders and updating the state of delivery.
Finances Flow – Incorporates payment schedules, consignment, credit terms, and also title deed arrangements.
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Well, companies use online platforms or SCM software for the management of the supply chain. They can customize online tools or software according to their needs. Furthermore, SCM software systems are available in two types. In addition, some software can be used both inside and outside of the company. Upstream information can be shared with suppliers, and downstream data can be shared with clients. It helps to increase cost-efficiency, improve time for marketing, and better management of resources. SCM is useful for managing resources and finance to generate more revenue as supply chain management functions are convenient. SCM is used for particular tasks like:
Improve overall efficiency
Reduce costs and generate more revenue
Better services for customers
Value chain optimization
The transformation process is the method of converting resources into services or products that consumers will buy. Well, industries need resources to trade.
Importance of Supply Chain Management in Organization
Supply chain management is not only about supply, but it also involves the primary stage of the process of product demands to product delivery and customer satisfaction. SCM includes:
Control of supply and demand
Sourcing and raw materials
Manufacture and assembling products
Warehousing and stock management
Inventory tracking
Order management
Distribution through multiple channels
Delivery of services or products
Production and Operations Management (POM) Under SCM
The production information supply chain includes many methods in different stages. The whole process of production is divided into different stages. Let us understand the different types of production methods in supply chain flow management.
Job Method
A job or task is done by a single person or a group or people (workers). Such a job can be complicated or small-scale, and it may involve low or high technology. In the job method, certain features are maintained to get the job completed successfully. The features are as follows.
Define Objectives: Clearly states the stages, dates, and milestones
Decision-making Process: Decision of tasks, labour, and resources.
Low Technology Jobs: Technology and skills are needed for low-technology jobs hence workforce is readily available. In this process, the purpose of the specific requirements of customers is fulfilled like hairdressers and tailors.
High Technology Jobs: Some jobs are complex and hence, require high-end technology and skilled management. Such jobs include better project control and management, like film productions and building construction projects.
Batch Method
In the bulk production of products, companies usually prefer the batch method. They will produce end-products in batches. The batch method involves task division and sub-parts of operations. Labourers are trained to complete specific processes, and resource management is essential to ensure the proper production equipment. Two features are imperative: Maximum utilization of equipment and skilled labour or workers. Most of the manufacturing companies adapt the batch method for bulk production.
Flow Methods
However, the batch method has some problems, especially when there is a lack of technology and skilled labourers. It is essential to manage the flow of working on completing batches one after another. The flow method eliminates problems of the batch method and ensures the continuous progress of materials and processes. The goals of the flow method are as follows.
Better materials’ flow
Improved workflow
The lesser need for specific labour skills
Quick and timely completion of the task
The flow method involves quick completion of different stages of production. As soon as one particular task is completed, the next step will be initiated without any delay.
Requirements for Flow Methods to Work Well
Demand should be regular. If the market is unpredictable or irregular, the flow method ends up with only stock production. In such conditions, problems of storage and stock management will be raised. The flow method works well in standard products; if products vary, you can not get it done by the flow method. Continuous progress needs a constant supply of materials and resources. The entire process should be divided into several stages.
FAQs on Supply Chain Flow Management Simplified
1. What is flow management in a supply chain?
Flow management in a supply chain is the process of coordinating and controlling the movement of goods, information, and money from the supplier to the end customer. It ensures that everything moves smoothly through all stages, like procurement, production, and distribution. The main goal is to deliver the right product, at the right time, in the right condition, and at the lowest possible cost.
2. What are the main flows in supply chain management?
The three primary flows in supply chain management are:
- Product Flow: This includes the physical movement of goods from a supplier to a customer, as well as any returns or service needs, which is known as the reverse flow.
- Information Flow: This involves transmitting orders, tracking deliveries, and sharing updates between all parties in the supply chain, such as manufacturers, distributors, and retailers.
- Financial Flow: This consists of all money-related activities like credit terms, payment schedules, and ownership arrangements, ensuring funds move correctly between partners.
3. What is the importance of effective supply chain management for a company?
Effective supply chain management is crucial for a business's success. Its main benefits include:
- Enhanced Customer Service: It ensures products are available and delivered on time, leading to higher customer satisfaction.
- Reduced Operating Costs: By optimising processes like inventory management and transportation, it lowers the overall cost of doing business.
- Improved Efficiency: It helps in the better use of resources, which minimises waste and reduces production delays.
- Greater Agility: A well-managed supply chain can quickly adapt to changes in market demand or unexpected disruptions.
4. Can you give a real-world example of a supply chain?
Certainly. Consider a simple bottle of juice you buy from a supermarket. Its supply chain involves several stages:
- Farmers who grow and supply the fruits.
- A processing plant that buys the fruits, makes the juice, and bottles it.
- A distributor who buys the bottled juice in large quantities and transports it to different locations.
- A retail store that stocks the juice on its shelves for you to buy.
Managing the flow of fruits, bottles, order information, and payments between all these stages is what supply chain management is all about.
5. How does the information flow differ from the product flow in a supply chain?
The key difference is in their direction and nature. The product flow is primarily the physical movement of goods from the supplier towards the customer—a mostly one-way path, except for returns. In contrast, the information flow is bidirectional, moving in both directions. For example, a customer's order (information) goes from the customer to the manufacturer, while shipping updates (information) go from the manufacturer back to the customer.
6. What happens if the financial flow in a supply chain is disrupted?
A disruption in the financial flow can cause a chain reaction that harms the entire supply chain. If a retailer fails to pay a distributor on time, the distributor may not be able to pay the manufacturer. This lack of funds can stop the manufacturer from buying raw materials. As a result, production stops, products aren't delivered, and shelves become empty, hurting every partner and the end customer.
7. Why is managing the 'reverse flow' of products just as important as the forward flow?
Managing the 'reverse flow,' also known as reverse logistics, is vital because it deals with customer returns, repairs, and recycling. A smooth and easy returns process builds customer trust and satisfaction. It also helps a company recover value from returned goods through repair or resale. Furthermore, properly handling recycling and disposal is essential for sustainability and maintaining a positive brand reputation.
