There are a variety of functions carried out by supply chain management. Many may consider these functions to be quite a challenging task, including those who are seasoned businessmen. It is possible to break down the process effectively into numerous strategic areas. An effective and commonly availed model is SCOR (Supply Chain Operations Reference) model. Supply Chain Council has come up with this model to enable modern managers to communicate, address as well as improve the practices efficiently.
Know the different stages of supply chain
There are five stages in the supply chain, the details of which are given below:
First Stage – Planning:
This is the first part to carry out and involves a variety of activities. You need to determine your operation strategy. Are you interested to buy components or products from another supplier or manufacture it yourself? You also need to consider the pros and cons associated with different options offered by supply chain management. Some viable options are as follows:
- Domestic manufacturing of products/components.
- Establishing production facilities to manufacture products/components in foreign markets.
- Purchasing components/products from foreign suppliers.
- Purchasing components/products from domestic suppliers.
If you plan to manufacture products/components, then determine how to produce the same.
Goods can be:
- Made to order (specially designed to meet customer’s specific order).
- Made to stock (manufactured, stored and then wait for customer orders).
- Configure to order (products manufactured partially and completed after receiving a confirmed customer order.
- Engineered to order (products manufactured to customer’s set unique specifications).
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Several methods given above can also be combined to produce goods. You need to determine if you would like to outsource the manufacturing process. Planning this particular operation procedure is crucial since such decisions are likely to affect the supply chain.
Moreover, planning involves mapping the network of warehouses and manufacturing facilities. It determines production levels including specifying transportation flows occurring between sites. Evaluation is also done to identify how the global supply chain can be improved along with its management procedures.
During the planning stage, strategies involving supply chain management procedures should align perfectly with your business strategies. Also, decide communication, methods to measure performance as well as gather data.
Second stages of supply chain – Source:
It involves procuring components and raw materials. Procurement refers to the acquisition of goods/services in the right quantities, at the lowest possible prices and at the proper time. After selecting and vetting sources, the next step is to negotiate contracts as well as to schedule timely deliveries.
You need to evaluate the supplier’s overall performance and make payments when appropriate. You may be required to work with several suppliers. It will mean managing company assets, managing inventory, ensuring export & import requirements.
The third stage – Make
In this stage, you are to schedule different production activities, test products, pack and release them for supply. Manage rules to enhance performance, facilities, data and regulatory compliance.
Fourth stage – Delivery
This stage tends to encompass the above-given steps, right from processing inquires from customers to distribution and transportation procedures. You need to manage inventory, warehousing or hire service providers to manage them.
Warranty or trial period is also part of the delivery stage. You need to invoice retail sites or customers and receive payments including manage export, import needs for all finished products.
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Fifth stage – Returns
Here, you need to manage effectively defective products returned by customers. It also includes identifying product conditions, scheduling product shipments, authorizing returns, providing refunds and replacing defective products.
‘End-of-life’ products are also part of returns including those that are not eligible to be sold, promoted or marketed in any form.
Hence, you should know the different stages of supply chain to run a business successfully.