Supply chain management is a process that regulates the flow of goods and services. It handles all aspects of transforming raw materials into finished products ready for sale and direct delivery to the customer. The essence of supply chain management strategies is to implement supply chains in a business network that are efficient and cost-effective. Without effective supply chain management, the global trade wouldn’t look like it does today.
Different types of businesses require different supply chain management processes. Retailers and distributors will have different needs than manufacturers. End-to-end supply chains will require strategic planning on an even grander scale.
If you’re thinking of implementing a supply chain management solution to your business, or improving supply chain management overall, it would be best to familiarize yourself with the process as much as possible.
In its core, the foundations of successful supply chain management strategies are simple. There are five key steps involved, as described by the Supply Chain Council. The first of them is the planning process.
Arguably the most critical step in the SCM process, supply chain operations planning consists of a wide range of activities. There are many decisions to be made in this stage, including whether you will:
- Manufacture a product or component domestically
- Manufacture a product or component internationally
- Buy a product or component from a domestic supplier
- Buy a product or component from an international supplier
Other features to consider in the supply chain planning process and management strategies are possible manufacture outsourcing, warehouse design, delivery models, deciding on the transportation management system, production levels, whether you will be keeping a safety stock of products, etc. In addition to this, you should also assess how this will affect global supply chains.
Don’t forget about your business strategy during the planning phase. Make sure that you implement communication systems and metrics to measure performance and gather data. Once the supply chain is established, you will need ways to determine whether it is efficient and effective enough and whether it meets both customers’ needs and your business goals.
The next step is sourcing, or organizing the acquirement of raw materials, components, or products. This procurement needs to happen at the right time, at the right cost, and in the right quantity.
Look for a supply chain partner that fits your business plans. Browse through as many options as you can find and select the ones that work for you according to your criteria and budget constraints.
Like in the supply chain planning step, you also need to establish processes for supplier relationship management and monitoring. Regularly evaluate the supplier’s performance and whether it is still in line with what your business needs. In this stage, the processes to focus on are ordering and receiving, inventory management, authorizing payments, and asset management.
In this step, if you are a manufacturer, you should organize activities related to receiving raw materials, manufacturing your product, performing quality testing, packaging, and scheduling for delivery. This is where the efficiency of the supply chain strategy is evaluated, as a successful supply chain will allow for maximum productivity in manufacturing.
If you are not a manufacturer but rather a retailer or a distributor, you still need to arrange processes regarding order fulfillment and possibly packaging.
Delivery and Logistics
Once you have the product ready, transportation, storing, and delivery come into the picture. The fourth step is dedicated to coordinating customer orders, scheduling deliveries, dispatching orders, invoicing customers, and collecting payment.
At this stage, you should think about distribution management strategies, warehousing, and options for transportation. If you don’t feel confident about performing the logistics yourself, consider hiring a logistics provider to save yourself the trouble. These providers can step in at any point in the supply chain and take over so that you have one less worry on your hands. Specialized logistics companies can even take on the responsibility of making sure your entire supply chain is operating at peak performance.
Also known as ‘reverse logistics,’ the final stage of supply chain management is creating a process or a network that allows the customer to return a product they’re unsatisfied with. This can also be a product that has reached the end of its life, meaning the manufacturer will no longer support it.
The phase of returning products includes authorizing those returns, assessing the condition of the returned product, replacing it if it is proven defective, or providing refunds to the customers. A fast, effortless returns management process always guarantees high customer satisfaction.
Effective Supply Chain Management
Aside from taking the necessary steps to improve your supply chain process, there are a few additional things you should take into account. An effective supply chain should be:
- Connected. A connected supply chain is one that allows you to access data from all its segments. Data management is at the heart of supply chain management, and it is especially important to be able to track data and monitor the progress of your goods in real time.
- Collaborative. In a collaborative supply chain, you have good relationships with your suppliers. There is very little that will keep your business running as smoothly, as being actively engaged with your supply chain partners.
- Resilient. Finally, as the ongoing world health crisis has taught us, supply chains need to be resilient. You may not be able to predict every disruption that could come your way, but risk management is an integral part of the process.
Successful supply chain management is relatively simple once you break it down. But even this simplicity requires dedication and hours of meticulous planning and work to get everything running like clockwork. Planning, sourcing, manufacturing, delivery and logistics, and returning are the key components of an effective supply chain management process that will help increase your profit and expand your business.
The good news is that you don’t have to lose sleep over your supply chain strategy, as there are companies geared explicitly towards organizing everything your business will need. Redbird Logistics Services would be more than happy to assist you with supply chain management and help you make your business gain a significant competitive advantage. Don’t hesitate to contact us!