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Supply chain management
Supply Chain Management is the method through which a business brings together all the elements to get its product into the market. It implies the management of a product flow in the production chain. it starts with the purchase of raw materials and ends up with the release of the end product. The ability to manage this process effectively requires efficient integration of all stakeholders such as manufacturers, suppliers, warehouses, and retailers. The chief goal of supply chain management is to ensure that the product is delivered to the right customer at the right time and place as well as at minimum costs.
The components of supply chain management
Every management process is a system with certain steps and components. According to Levi, S, Kaminsky, & Shankar (2007), the components of supply chain management are procurement, production, distribution, and sales.
Procurement means the purchase of raw materials needed to manufacture a product. Thats why every company negotiates contracts with suppliers and builds long-term partnerships to ensure continuous sourcing of raw materials.
Production is a multi-stage process when the product is being manufactured. Distribution includes product delivery from the plant to the warehouses, where it is stocked to be sold to consumers. Sales are activities when the product is being sold at a pre-determined price.
Issues and challenges of todays supply chain
According to Levi, S et al. (2007) all issues, and challenges can be categorized into three levels: strategic, tactical, and operational. The same applies to the supply chain which is facing a wide variety of issues nowadays.
For instance, issues at the strategic level have a great scope and impact the company in the long term. When the company is determined to set up a new plant to increase production output is a good example here. Many factors have to be taken into consideration, such as costs incurred, delivery time, and the shelf life of the product itself. Another problem here is the choice of the suppliers. The relationships between a supplier and a manufacturer should be both optimal and advantageous. Globalization has a big impact on the way companies build strategic relationships now. Firstly, global-level operation challenges companies to improve performance and communicate more efficiently with partners around the globe. Also, the location of manufacturing facilities around the world creates a need to develop a new strategy for the supply chain management.
Tactical level issues include decisions made in a mid-term scope such as production output, effective inventory management, transportation of a product. It should be noted that efficient inventory management is crucial in todays fast-moving world, as it involves extra costs to maintain the product which becomes outdated quickly. Therefore, inventories need to be carefully calculated and maintained.
Operational level issues include daily activities which affect the companys functioning, such as balancing a timely delivery of the end product to the customer and a supply of raw materials. daily activity management such as the ratio between workload and quantity to be produced is challenging for companies who want to be profitable.
Conclusion
To sum up, supply chain management is crucial for every company to organize efficiently. Todays challenges of the globalised economy, which impose new rules on supply chain management, should be considered. The introduced strategies discussed above will allow companies to be very precise with their requirements.
Reference
Levi, S, Kaminsky P & Shankar R 2007, Introduction to Supply Chain Management, Designing and Managing the Supply Chain: Concepts, Strategies and Case Studies, McGraw Hill, New York.
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