In general, supply chain management covers the operations required to produce a good or service from scratch – starting with finding the supplier of raw materials to delivering ready goods to the end customers. Companies with seamless supply chain processes have faster ROI and satisfied customers. These aspects are the most vital components of effective supply chain management (SCM). Even if a client sends the purchased product back, the way a company handles this issue may be critical for further company-customer relationship. The recent study shows that over 70% of people with positive product return experience will be more likely to place an order by this company again.
To meet the most sophisticated consumer demands, the SCM has to be well-planned, flexible, responsive, and innovative.
5 Steps of Supply Chain Process
The essential components of supply chain management include planning, sourcing, production, stock management, and logistics.
1. Planning – It is an initial stage of network management, where all begins. Here, supply chain managers perform in-depth planning of customer demand, production, and supply.
2. Sourcing – This procedure refers to searching for reliable suppliers that offer suitable raw materials affordably and establishing regular communication with these suppliers.
3. Production – The production process implies creating goos or services from sourced raw materials. For example, a shoe company converts plastic, textile, eco-leather, and other elements into footwear.
4. Stock – During the stock (inventory) management phase, products are transferred to a warehouse, placed, stored and prepared for shipping.
5. Logistics – The last but not the least. Here warehousing and transportation take place, two major processes for successful SCM. Transportation managers organize vehicle movement between warehouses and retailers. Warehouse management covers inventory management and order fulfillment.
Top Recommendations for Supply Chain Management
To succeed in a fast-pacing and technology-driven supply chain global market, a company has to create a connection between SCM and enterprise planning. Here is a 5-step guide to achieving integrated supply chain management:
1. Establish contingency planning within your SCM
2. Align planning of supply chain process with enterprise goals
3. Anticipate the fluctuations in customer demands
4. Leverage RTD (real-time data) across the entire supply chain
5. Ensure your business is ready to adapt to disruptions quickly
Supply Chain Industry Trends
The revolutionary digital supply chain is coming. The trends below show how transformative technologies affect the logistics processes and bring benefits to their adopters.
AI-based instruments are aimed to gather tons of data, analyze them, and generate insights for predictive analysis. This helps executives and company managers to improve demand prediction, demand shaping, and automate many manual IT tasks. IoT tools, like radio-frequency identification (RFID) or QR codes, automatically monitor the goods in real-time. This enables companies to control the location, conditions, and other factors that can affect the product’s quality. Blockchain enables progressive companies to establish global trade relationships using smart contracts and dramatically enhance the security of transactions through cryptography.
The Bottom Line
To have a supply chain process that keeps a business thriving, business leaders need to mix a strong technical background with business and communication skills. The SCM can be improved through various aspects, from incorporating AI, robotics, Blockchain, to supporting green initiatives, which elevate the brand image.
With innovations in place, organizations can automate dozens of processes, reduce operational costs, speed up cash flow, and achieve a higher overall supply chain performance.
