Supply Chain Management - The Winning Edge

Supply chain management (SCM) is the process of planning, implementing, and controlling the operations of the supply chain with the purpose to satisfy customer requirements as efficiently as possible. It spans all the movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption. It encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, Supply Chain Management integrates supply and demand management within and across companies. The term supply chain management was coined by consultant Keith Oliver, of strategy consulting firm Booz Allen Hamilton in 1982.

As companies search for ways to proactively stay ahead of competition, there is a continuous and intense pressure on the profit margin, customers’ are getting sophisticated in their demands and it is increasingly becoming difficult for organizations to exceed or meet their needs. Meeting or exceeding such expectations is a critical success factor that can be achieved through efficient and cost effective flow of materials and information from source through the entire organization and unto the end user. Efficiency in material and information management has become a challenging reality confronting many organizations.

Photo: glenwoods

The aim of this contribution is to help organizations understand how to develop, organize and execute proper supply chain management in their organizations; and free all bottle necks and identify hidden values in their operations by increasing profit, customer service, quality and reducing lead time.  

Supply Chain Activities/Functions:

Supply chain activities can be grouped into strategic, tactical, and operational levels of activities.

Strategic

• Strategic network optimization, including the number, location, and size of warehouses, distribution centers and facilities.
• Strategic partnership with suppliers, distributors, and customers, creating communication channels for critical information and operational improvements such as cross docking, direct shipping, and third-party logistics.
• Product design coordination, so that new and existing products can be optimally integrated into the supply chain, load management
• Information Technology infrastructure, to support supply chain operations.
• Where to make and what to make or buy decisions
• Align Overall Organizational Strategy with supply strategy

Tactical

• Sourcing contracts and other purchasing decisions.
• Production decisions, including contracting, locations, scheduling, and planning process definition.
• Inventory decisions, including quantity, location, and quality of inventory.
• Transportation strategy, including frequency, routes, and contracting.
• Bench-marking of all operations against competitors and implementation of best practices throughout the enterprise.
• Milestone Payments

Operational

• Daily distribution planning, including all nodes in the supply chain.
• Demand planning and forecasting, coordinating the demand forecast of all customers and sharing the forecast with all suppliers.
• Sourcing planning, including current inventory and forecast demand, in collaboration with all suppliers.
• Inbound operations, including transportation from suppliers and receiving inventory.
• Outbound operations, including all fulfillment activities and transportation to customers.
• Order promising, accounting for all constraints in the supply chain, including all suppliers, manufacturing facilities, distribution centers and other customers.
• Performance tracking of all activities.

Photo: enterrasolutions

 Supply Chain Focus:

• Customer service Management
• Product development and Commercialization
• Procurement
• Logistics

 i.            Inspection

ii.            Packaging/shipping

iii.            Customs Clearing

iv.            Post Shipment Transportation

v.            In-country forward and reverse logistics

vi.            Asset Management

• Packaging/Assembly Plant/Factory.
• Reverse Logistics/Returns Management
• Inventory Management and Distribution

i.            Warehouse

ii.            Physical Distribution

iii.            Outsourcing/ Partnerships

•  Performance Measurement

i.            Cost

ii.            Quality

iii.            Speed of operations

The above mentioned indices are measured against customer perception, best practice bench-marking, industry standard and against promises to the customers both internal and externally. The focus is to consistently meet or exceed our customers’ expectations.

In the subsequent editions, I’ll begin to explain the different aspect of supply chain and how it can be used as a competitive edge of an organization.

Prolog Consulting Limited

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