A supply chain is a collection of steps that a company takes to transform raw components into final products and deliver them to customers. Supply Chain Management (SCM) is the process that a company uses to ensure the effectiveness and profitability of its supply chain and the operations of the firm as a whole.
Stages
One common and very effective model is the Supply Chain Management (SCOR) model, designed to enable managers to effectively improve their supply chain management practices. The SCOR model consists of five stages: planning, development, manufacturing, delivery, return.
The initial step in the supply chain process is the planning phase. A plan or strategy needs to be developed to decide which products and services will meet the requirements and satisfy the needs of customers. At this stage, planning should mainly focus on developing a strategy that maximizes profit. After planning, the next step, involving development. At this stage, they mainly concentrate on establishing strong relations with suppliers of raw materials necessary for production. This is connected not only with the definition of reliable suppliers, but also with the definition of various methods of planning the delivery, delivery and payment of the product. Thus, at this stage, supply chain managers need to develop a set of pricing, delivery and payment processes with suppliers, as well as create conditions for monitoring and establishing relationships. Finally, supply chain managers can combine all these processes to process their goods and services. This processing includes the receipt and inspection of shipments, their transfer to production facilities and authorization of payments by suppliers.
The third step in the supply chain management process is the production or manufacture of products that need to be delivered to customers. At this point, products are tested, packaged, and synchronized for delivery. Here the task of the supply chain manager is to plan all the activities necessary for the production, testing, packaging and preparation for delivery. This stage is considered as the most metrically intensive supply chain block, where firms can evaluate quality levels, production productivity and labor productivity.
The fourth stage is the delivery stage. Here, products are delivered to the customer at the designated location by the supplier. This stage is mainly the logistic stage, when customer orders are accepted and the delivery of goods is planned. The delivery stage is often referred to as logistics, where firms collaborate to receive orders from customers, create a network of warehouses, select carriers to deliver products to customers, and create a billing system to receive payments.
The final and final stage of supply chain management is called return. At the stage, defective or damaged goods are returned to the supplier by the customer. Here, companies must deal with customer requests and respond to their complaints, etc. This phase is often a problematic section of the supply chain for many companies. Supply chain planners need to find a flexible and flexible network to receive damaged, defective and additional products back from their customers and facilitate the return process for customers who have problems with the delivered goods.
Functions
Management of quality customer service. This is the first supply chain management feature. It relates to the procurement of raw materials and other resources necessary for the production of goods. This requires coordination with suppliers to deliver materials without any delays and coordination of all processes in the chain for successful operation.
Operations
The operations team is engaged in planning and forecasting demand. Before giving an order for the supply of raw materials, the organization must anticipate possible market demand and the number of units that need to be produced. Accordingly, it also establishes the movement of the ball for inventory management, production and delivery. If demand is expected, this can lead to excess inventory costs. If demand is expected, the organization will not be able to meet customer demand, which will result in a loss of revenue. Thus, the operational function plays a crucial role in supply chain management.
Logistics
This supply chain management function requires tremendous coordination. The production of products has begun. It needs storage space until it is sent for delivery. This requires the establishment of local warehouse agreements. Say the products must be delivered outside the city, state or country. This results in carriage in the loop. There will also be a need for storage at the terminal. Logistics ensures that products reach final delivery without any interruptions.
Resource management
Any production consumes raw materials, technology, time and labor. However, all processes must be efficient and effective. This phase takes on the work of the resource management team. He decides to allocate resources in the right way at the right time to optimize production at reduced prices.
Information flow management
Information sharing and dissemination is what actually supports all the other supply chain management functions. If the information workflow and communication are bad, it can break the whole chain and lead to mismanagement.
Quality Work Components
1. Internal staff (change management).
In order to interest key parties in choosing your company and change the course of development to a more favorable one, you must make the transition from the question “Why change?” to “How to change who will be responsible for key processes?”
Change management in any case cannot happen in a vacuum: you need to attract a wide audience to communication and preliminary planning of the project.
It is very important to communicate closely with the teams and individuals who will be most affected by the proposed changes, especially the front line employees who actually carry out the process and conduct daily work. Early consultation and inclusion is important for all interested parties, but especially for frontline performers, because it is they who can quickly find holes and shortcomings in the proposed changes, which can then be more actively considered.
2. Schedule of success.
One of the best ways to set up your organization to succeed in overseeing the supply chain is to create and maintain a clear schedule. As you know, basic project management involves managing three things: area, schedule, and resources.
Phasing changes is another good way to reduce risk. This allows the project team to focus on important tasks and quality work without feeling temporary pressure on the corners. This helps to create a positive impetus, as the project remains on schedule, reaches its milestones and gives more stable results step by step.
3. Supplier involvement.
Participation and acceptance of suppliers is very important for any cooperation project: the success of your system is directly related to the desire of your suppliers to use it. If you are a large fish in a small pond, your suppliers are generally more “willing” to participate and use your system. Small and medium-sized companies do not have this advantage, so they need to use a little more subtly. For them, ensuring ease of use of the system and adding value to suppliers is crucial.
Regardless of the size of the company, there must be benefits to all parties for the long-term success of the supply chain. Both parties should feel that they can depend on each other, and this is more than an effective means to an end. This improves the speed, quality and fruitfulness of work.
Logistics and integrated supply chain
This is a process in which each phase from the purchase of raw materials to production, quality control to packaging, distribution or delivery for final delivery is monolithic and inseparable. This is a holistic list of various processes that may be under the full control of one company or several partners, united for collective control over the integrated process. Supply chain integration has several advantages, so most companies have switched to integrated supply chain management.
Supply chain management in organizations
Supply chain management in an organization is essential to the overall success of the company and customer satisfaction. It includes all the activities that lead to success from the beginning of planning, managing all types of activities and operations of creating sources to procurement and logistics (transport, warehouse management, inventory management, etc.), marketing operations, as well as coordination and cooperation. between all parties involved in the supply chain of suppliers (outsourcing) and service providers and customers.
Vertical integration
This is the process of expanding your control at different levels of production. You can use reverse integration, forward integration, or both, depending on your resources and targeted achievements.
The concept of the production chain
The value chain is the whole set of production activities that occurs from the processing of raw materials to the transfer of finished products to the markets. Michael E. Porter, a well-known expert on business strategy, defines primary and secondary activities as the main stages of value creation. Primary activities contribute directly to value creation and may include logistics, product promotion, and after-sales services. Secondary activities are supporting tools, such as personnel, operational infrastructure, and procurement processes.
Horizontal integration
This is an expansion of the business at the same point in the supply chain, either in the same industry or in one bordering on it. A company can achieve growth through internal expansion. This can happen when a retailer increases the variety of products that he sells in a certain category. For example, a barber shop that sells a limited number of shampoo brands may add other brands to its shampoo offerings to appeal to a wider and more diverse client base.
Merger
A company can also provide horizontal integration through external expansion. This is achieved by merging with another company at the same stage of production. This may allow the company to diversify into additional but diverse product markets. However, if the products that companies sell are similar, the merger is considered a union of competitors. A merger is called a monopoly, when all manufacturers of a certain product or service merge and an oligopoly, when most manufacturers merge into several large alliances.
Logistics and supply chains: universities where you can study them
There are many universities in Moscow where logistics is taught. We bring to your attention a list of educational institutions where a quality education in this profile is provided:
- MIIT. There is a faculty called International Transport Logistics and Supply Chain Management, and there is Transport Logistics. The difference is that at the first faculty, students study in depth two foreign languages. The second direction is intended for applicants with a mathematical mindset.
- HSE, Logistics and Supply Chain Management.
- MGAVT, faculty "Technology of transport processes".
- GTU named after N.E. Bauman, Faculty of Management. Industrial Logistics.
- REU named after G.V. Plekhanov, faculty "Logistics. Management".
- MADI, Faculty of Supply Chain Management.
- GUU, faculty "Logistics and management of transportation processes".
Conclusion
Benefits of a plan to improve supply chain management:
- You create expectations and perspectives for the organization that are feasible, useful and improve the performance of the whole organization.
- You ensure the availability of the necessary assets and resources.
- You synchronize the overall actions of the organization to optimize the work.
The system is quite simple and requires maximum concentration and thoughtfulness in its implementation.