Fashion Risk Management Supply Chain +scholar

Supply Chain Management

Russell Kay By

Contributing Author, Computerworld |

In the simplest terms, supply chain direction (SCM) lets an organization get the right goods and services to the place they're needed at the correct time, in the proper quantity and at an acceptable cost. Efficiently managing this process involves overseeing relationships with suppliers and customers, controlling inventory, forecasting demand and getting constant feedback on what'due south happening at every link in the chain.

The supply concatenation involves several elements:

• Location. It'southward important to know where production facilities, stocking points and sourcing points are located; these determine the paths along which appurtenances will flow.

• Production. An organization must decide what products to create at which plants, which suppliers will service those plants, which plants will supply specific distribution centers, and, sometimes, how appurtenances will get to the final customer. These decisions accept a big touch on revenue, costs and customer service.

• Inventory. Each link in the supply concatenation has to keep a certain inventory of raw materials, parts, subassemblies and other goods on hand as a buffer confronting uncertainties and unpredictabilities. Shutting downwards an assembly plant because an expected parts shipment didn't go far is expensive. But inventory costs money too, and so it'due south of import to manage deployment strategies, make up one's mind efficient order quantities and reorder points, and set safety stock levels.

• Transportation. How do materials, parts and products get from one link in the supply chain to the next? Choosing the best mode to send appurtenances ofttimes involves trading off the shipping price against the indirect cost of inventory. For example, shipping by air is generally fast and reliable. Shipping by sea or rails will probable be cheaper, peculiarly for bulky goods and large quantities, only slower and less reliable. And then if yous ship by bounding main or track, you have to plan further in accelerate and keep larger inventories than you lot practice if yous transport by air.

Managing the Concatenation

Once yous've determined all of the elements in the supply chain, how practice you manage the chain? At that place are three chief paths in the process:

• Product flow includes the move of goods from a supplier to a customer, also as customer returns.

• Data period involves transmitting orders and updating the condition of delivery.

• Financial flow consists of credit terms, payments and payment schedules, plus consignment and title ownership.

Juggling these elements involves record-keeping, tracking and analysis by many departments. Supply chain software, especially large, integrated packages, combines many unlike technologies to requite a single view of supply chain data that can be shared with others.

SCM applications fall into 2 main categories: planning applications and execution applications. Planning applications decide the best way to road materials and the quantities of appurtenances needed at specific points. When such applications work well, they brand possible the "just-in-time" delivery of goods. Execution applications track financial data, the physical status and flow of goods, and ordering and commitment of materials.

A relatively new SCM option involves Web-based software with a browser interface. Several major Spider web sites now offering auctions and other electronic marketplaces for buying and selling goods and materials. Also, Web-based application service providers are now promising to provide part or all of the SCM services for companies that rent their services.

SCM is so big that it can be difficult to plan the deployment of such a organization. Just remember, a chain connects 1 link to the next, and an SCM implementation tin can proceed similarly. Each added link brings more than efficiencies. When all of the links are in place, and when the information, goods and finances are flowing properly, the benefits are enormous. This is truly a case in which the whole is greater than the sum of its parts.

Implementation of Supply Concatenation Management

Typical Functional Silos
Business Processes	Sales and marketing	Technical	Logistics	Manufacturing	Purchasing	Finance and bookkeeping
Customer relationship management	Account management	Requirements definition	Requirements definition	Manufacturing strategy	Sourcing strategy	Customer profitability
Client service management	Account assistants	Technical service	Performance specifications	Coordinated execution	Priority assessment	Cost to serve
Demand management	Demand planning	Process requirements	Network planning	Capability planning	Sourcing	Trade-off analysis
Fulfillment	Special orders	Environmental requirements	Distribution management	Found direct	Selected supplier(due south)	Distribution cost
Manufacturing period management	Packaging specifications	Procedure stability	Prioritization criteria	Production planning	Integrated supply	Manufacturing cost
Procurement	Gild booking	Material specifications	Inbound menses	Integrated planning	Supplier management	Materials cost
Production development and commercialization	Business plan	Production design	Movement requirements	Process specifications	Fabric specifications	Inquiry and development price
Suppliers						Customers

Source: Adapted from the article "Supply Chain Management: What Does It involve?" in the Autumn 2001 issue of Supply Chain & Logistics Journal, by Douglas M. Lambert, a professor of marketing and logistics at The Ohio State University's Fisher Higher of Concern (www.infochain.org/quarterly/F01/Lambert.html).

Missing Links

Stories in this study: