Supply chain management is the process of integrating supply and demand management, not only within the organization but also across all the various members and channels in the supply chain so they work together most efficiently and effectively.
Supply chain solutions thus facilitate the bi-directional flow of materials, information, and funds and help the business to be more systematic and organized. Here are five basic components of a supply logistics system:
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To meet customer demands, supply chain managers have to plan ahead. This means forecasting demand, designing the supply chain intentionally, and determining how the organization will measure the supply chain to ensure it is performing as expected in terms of efficiency, delivering value for customers, and helping to achieve organizational goals.
Selecting suppliers who will provide the goods, raw materials, or services that create the product is a critical component of the supply chain. Not only does this include creating the contracts that govern the suppliers, but also managing and monitoring existing relationships.
Supply chain managers also need to help coordinate all the steps involved in creating the product itself. This includes reviewing and accepting raw materials, manufacturing the product, quality testing, and packaging.
Ensuring the products reach the customers is achieved through logistics and it’s fundamental to supply chain success. This includes coordinating the orders, scheduling delivery, dispatching, invoicing, and receiving payments.
Supply chain managers also need to develop a network that supports returning products. In some cases, this may include scrapping or re-producing a defective product; in others, it may simply mean returning a product to the warehouse. This network needs to be responsible and flexible to support customer needs.