Supply chain management is an essential aspect of most businesses today. It is the movement of everything from raw material to finished product from point A to point B. It is a complex web of organizations, companies, suppliers, and of course, the end customers. The term supply chain management is the management of everything included in this process, from material transportation between points, warehousing and inventory management, management of staff responsible for these tasks. It also contains effective shipping and delivery of the product to clients and customers.
By breaking down the many essential business functions of a company into little strategic tasks, supply chain managers ensure a smooth business transaction without hiccups. To understand how to establish a supply chain with ease, the supply chain operations reference model comes in really handy. It helps executives and managers to address the common issues of developing a supply chain network. These stages are planning, sourcing, making, delivering, and returning.
1. Plan
Depending on the company and what they offer, this process can involve a wide range of activities. This is where you plan what needs to be procured and from where in the next step which is ‘source’. Then you do what is ample for production and go through with it in the ‘make’ process and then get it to the end customer in ‘deliver’. These decisions are what compile the planning process.
Sometimes products are manufactured using a combination of various processes, including being manufactured locally, manufacturing parts and then assembly, or sourcing parts and assembling locally. The planning procedure includes mapping out the location of factories, warehouses and then looking at where the chain would take them next based on convenience.
2. Source
This process involves identifying the vendors to procure goods and services to meet the requirements of the plan. There are certain standards that need to be met in terms of quality and quantity. The values of quantity are dynamic and can change over time. Sometimes in the case of perishable products, a minimum inventory model is followed so that you source just enough product to make the supply chain work without having ruined the product.
Many times companies would be working with a network of such suppliers. They should adjust payments accordingly quickly and make sure regular audits are made, and analysis is done to make sure that particular suppliers are still as valuable.
3. Make
This is where you make the products your own, deal with the legalities and paperwork. This is also where testing of the product takes place, determining whether it is fit to be released in the market. A meticulous production and distribution schedule must be established to maintain a smooth supply chain operation. This part of the supply chain deals with the assembly, testing, packing and everything else needed to make the product finalized.
4. Deliver
Delivery of products can either be very complicated or very simple. It is up to the efficiency with which you design the network of warehouses and transportation. A great way to tackle this challenge is by partnering up with a 3PL or Third-Party Logistics company like ARK India. Sometimes this menial everyday process can be very time-consuming and inefficient in the longer run. A partner like ARK India will help you simplify this process and make sure the most cost-effective operation is set up for your gains.
5. Return
Modern business requires you to be flexible with returns as well. Return of defective or damaged products is something every company needs to be prepared for. And in this preparation, you must set up a reverse logistics network where customers can return products without much hassle. This process includes monitoring the cost it takes for product returns, the condition of returned products, and plugging the holes in your process that cause these returns.