Supply Chain Management
Comprehending Supply Chain Management's Fundamentals :
Describe the supply chain
Many people mistake logistics for
supply chain. Although managing the movement of goods is a broad term in
logistics, the Supply Chain includes all phases of supply, including logistics.
Thus, the supply chain's logistics chain is a crucial component.
What exactly is a supply chain? To put it simply, a company's supply
chain enables it to deliver a product to a client. However, the supply chain
involves a number of phases before the customer receives their product. This is
particularly true for imported goods, as there are more parties engaged in the
transportation from supplier to distributor and the subsequent distribution
from distributor to customer.
The supply chain, which is frequently described as just logistics,
refers to all of the businesses, organizations, and individuals involved in the
production of a product, from its conception to its sale through distribution
channels.
Making things as affordable as feasible for your clients is the goal of
a supply chain. The supply chain must be as efficiently optimized as possible
in order to do this.
A business with effective supply chain management makes sure that the
degree of inventory control it maintains is sufficient to meet demand while
minimizing the risk of overproduction and stockouts.
Supply chain movement
Three flows need to be managed throughout the supply chain. These 3
flows are:
+ physical flows, which stand in
for the actual goods;
+ information flows, which include a company's Big Data;
+ financial and administrative flows, which stand in for the actual
financial transactions made throughout the Supply Chain, as well as the
paperwork managing these various flows.
Physical movement
From the point of manufacture to the point of sale, this is the transit
and storage of goods. If your business is online-based, this could be in the
storage facility from where the products would be sold.
Transporting items is a part of this flow. As it takes into account the
storage and transit of commodities, it is frequently linked to logistics.
Flow of information
Having effective data management
is essential for supply chain optimization. Big Data is how a corporation
organizes this data. Personal information about customers, customer reviews
posted on various websites and social networks, internal company data, and more
are all included in this big data.
A corporation will be able to set reasonable sales prices for its
clients while taking its sales margin into account thanks to the acquisition of
this data.
The organization will be able to make an informed decision by
considering the selling price it charges when selecting the supplier, the
delivery method, and the delivery time. Negotiating transportation expenses so
they can be added to the product's selling price is the goal here.
Additionally, the large data a corporation accumulates gives the knowledge required to generate accurate projections of the product stockpiles to be built up. Companies can utilize a variety of software solutions to manage supplies, handle orders, and predict demand in order to do this.
Big Data from
businesses is used by software like ERP (Enterprise Resource Planning) to
prevent supply disruptions or, on the other hand, overstocking, which can be
expensive for businesses.
administrative and financial flow
It all comes down to understanding how money moves throughout the supply
chain's service providers.
Long logistical chains frequently involve the passage of commodities
through numerous nations with various currencies and legal systems (such as
customs charges, etc.).
To make sure that there is no delay in the delivery of goods, all of
these elements must be taken into consideration.
Management of the Sustainable Supply Chain: Problems and Solutions
Organizational management, both strategic and operational, has been
significantly impacted by globalization. Supply networks have undergone one of
the biggest changes.
In today's world, developing or transitioning economies generate a wide
variety of commodities, which lowers production costs. These international
supply chains also present new dangers and difficulties.
Businesses could run into issues with supply disruptions or low quality
in particular. The problems that these cross-border networks create in terms of
culture, law, administration, linguistics, and politics are added to this.
Then there are social and environmental issues including child labor,
poor working conditions, and corruption. Environmental issues include
recycling, product design, and rehabilitation. These difficult problems
sometimes feel never-ending.
Chain of Sustainable Supply
Senior supply chain executives must consider a variety of factors when
creating new supply chains or enhancing existing ones. Consider the big picture
first. Why does your business wish to change?
What are the opportunities and risks? Determine which levers will
improve your chances of success when you've properly established your
motivations. Finally, you need to implement the procedures that will enable you
to get the outcomes you want.
Using the five Cs framework, define the motivational components
There are several justifications for not ignoring social and
environmental concerns in your supply chain. Understanding these problems will
help you set goals and organize your practices more effectively. The five types
of justifications listed in the study are depicted in the chart below:
1. Client: enticement, adherence, standing, accessibility, and brand
2. Conformity: rules, peer pressure
3. Costs for risk management, productivity, and efficiency
4. Competitiveness: An advantage
5. Moral responsibility and values
Using the seven Ps framework to evaluate levers
Your efforts to create a sustainable supply chain might be aided or
obstructed by the following seven major levers. To understand whether and how
you can impact these levers, you must examine them. Examples of each element
are shown below (the elements in bold are most prevalent in the
literature reviewed).
Project INTERNAL LEVERS:
Coordinate sustainability with company strategy and demonstrate
organizational CSR performance;
Internal policies:
unambiguous principles/codes of conduct, widely distributed policies,
financial resources, workshops and training sessions, incentives, and results
that are open and measurable.
People: strong leadership and management, a welcoming company culture,
change agents, and a highly skilled workforce.
Pairs of external levers: industry cooperation:
Partners: confidence in the reliability of suppliers; open communication
with suppliers; long-term relationships with suppliers; certification by
outside organizations; a shared vision and experiences with suppliers;
investments in their activities; relationships based on incentives; and
cooperation with suppliers.
Regulatory favorability in public policy Power includes control over
suppliers and organizational size.
Framework of fundamental practices for bettering practices
The key methods for implementing sustainable supply chains are as
follows:
Create a code of conduct, get accreditation from outside organizations,
choose suppliers, and keep an eye on them.
These four "basic"
principles, in our opinion, should be implemented by all businesses. These
procedures show a centralized control strategy for supply chain management,
where the principal, the primary buyer, sets most of the guidelines and
procedures.
Technology's Effect on Supply Chain Management:
Supply chain digitization to increase visibility
The components of the supply chain—purchasing, production, inventory
control, logistics, and customer service—appear to be separate. However, strong
cooperation between these various supply lines is necessary to accomplish
supply chain efficiency.
Accessing trustworthy, current information for all participants in the supply chain
In order to digitize the supply chain, information must be transmitted
more effectively between the various links. Here, dematerialization and
real-time information processing are crucial, with a host of advantages to be
had:
+ Improvements in inventory management,
+ better demand forecasting,
+ increased productivity,
+shortened delivery times,
+ improved customer experience.
+ Greater reactivity to supply chain interruptions.
In the end, digitizing the supply chain enables your business to provide clients with a premium, personalized experience while keeping related expenses under control and increasing profitability.
The advancement of digital technology is necessary for the supply
chain's digital transformation. We cordially invite you to learn about the most
recent innovations that will transform your business and build an entirely
integrated supply chain.
To sum up, supply chain management is crucial to ensuring a business'
effectiveness and profitability. It includes the coordination of multiple
flows, including physical, informational, and monetary ones, in order to
provide clients with goods at the lowest cost. Furthermore, it is essential to
include sustainability in the supply chain since it can give businesses a
competitive edge while addressing social and environmental issues. The
improvement of supply chain visibility and management through digital
transformation also helps to improve customer satisfaction and efficiency.