WHAT IS SUPPLY CHAIN MANAGEMENT : An Overview

WHAT EXACTLY IS SUPPLY CHAIN MANAGEMENT OR WHAT IS BASIC COMPONENT OF SCM?

As per Supply-Chain Operations Reference-model (SCOR®) which has been developed by Supply-Chain Council. This model organized and focused on the five primary management

1. PLAN
2. SOURCE
3. MAKE
4. DELIVER
5. RETURN

1. Plan: This is vital part of SCM philosophy, where the companies normally need to make strategy for managing all the resource that go towards fulfilling the customer demand for the product and services that they offers. A big piece of planning is developing a set of matrices to monitor the Supply chain so that it would be efficient, cost effective and deliver high quality and value to the customer.

2. Source: It means processes that procure goods and services to meet planned or actual demand. This part of SCM consists of selecting right suppliers that will deliver the good and services that need to create your product. Developing a set of pricing, delivery and payment process with supplier is important. Also this will also take care of managing the inventory of goods, and services you receive from your suppliers, including receiving shipping, verifying them, transferring them into various facilities and authorizing supplier payment.

3. Make: This is basically a step where your company starts fulfilling the request or BUILT for products into finished state to meet planned or actual demand. Schedule activity necessary for production, testing, packaging and preparation for delivery.

4. Deliver: This is also called Logistic Process. This is the processes that provide finished goods and services to meet planned or actual demand, typically including order management, transportation management, and distribution management.

5. Return - This is real pain of SCM model, which defined as processes associated with returning or receiving returned products for any reason.

Typical model can be best described as:

WHO IS THE STAKEHOLDER OF SUPPLY CHAIN

These are considered as stake holder of SCM:

• Customers
• Your Company
• Design Partners
• Material Suppliers
• Contract Manufacturers
• Logistic Providers

WHAT ARE DRIVERS OF THE SUPPLY CHAIN?

These are the main drivers :

• Production
• Inventory
• Location
• Transportation
• Information

1. Production
This driver addressing these questions: what products does the market want? How much of which products should be produced and by when?
This activity includes the creation of master production schedules that take into account plant capacities, workload balancing, quality control, and equipment maintenance.

2. Inventory
This driver addressing these questions: What inventory should be stocked at each stage in a supply chain? How much inventory should be held as raw materials, semi finished, or finished goods?
The primary purpose of inventory is to act as a buffer against uncertainty in the supply chain.

3. Location
This driver addressing these questions: Where should facilities for production and inventory storage be located? Where are the most cost efficient locations for production and for storage of inventory? Should existing facilities be used or new ones built?
Once these decisions are made they determine the possible paths available for product to flow through for delivery to the final consumer.

4. Transportation
This driver addressing these questions: How should inventory be moved from one supply chain location to another? Air freight and truck delivery are generally fast and reliable but they are expensive. Shipping by sea or rail is much less expensive but usually involves longer transit times and more uncertainty.

5. InformationThis driver addressing these questions: How much data should be collected and how much information should be shared?

Timely and accurate information holds the promise of better coordination and better decision making. With good information, people can make effective decisions about what to produce and how much, about where to locate inventory and how best to transport it.

GET FAMILIAR WITH TOP 10 TERMS, DEFINITIONS AND TERMINOLOGY IN SCM

Master Demand Schedule - MDS

The MDS is a consolidation of demand by product and time bucket

Master Production Schedule- MPS

The MPS is a statement of supply required to meet the demand for the items contained in the MDS. The master production schedule defines the anticipated build schedule for all products. The master production schedule also provides the basis for order promising (ATP) function

Material Requirements Plan-MRP

The Material requirements planning (MRP) calculates net requirements from gross requirements by evaluating:

• The master schedule
• Bills of material
• Scheduled receipts
• On-hand inventory balances
• Lead times
• Order modifiers

Advanced Supply Chain Plan- ASCP

Constrained Based and optimized version of MRP

Planned Order

Automatically suggested action from planning engine

Consumption

The process of "relieving" the forecast to prevent double counting of demand

Drop Ship

Having an order ship directly from the vendor to the customer without physically being in your inventory.

Vendor Managed Inventory- VMI

The process of giving the vendor the authority and visibility to determine what your inventory should be

Customer Owned Inventory- COI

Where you are managing the customers inventory on your premises and supply as required

Work Order/Sales Order

The request that you received from the customer for fulfilling there demand.