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My Introspective

by Laurus Nobilis
My BrainCast

Supply Chain

Supply Chain Management:

Product (E)

 

What was the evolution history of supply chain management? What are the main components of supply chain? How big is the importance of supply chain integration?

 

Posted: Oct 2011


The product management, from perspective of supply chain, is very complex process. The product that you find on the shelf is only the final stage of supply chain, before it is being sold. Before that there are many steps that are necessary for product to materialize.

If you take the example of the car, try to imagine how many components it contains. Although every manufacturer of car parts is producing many different parts of them at same time, still this makes a dozens of suppliers.

Every one of them has many suppliers of components and raw materials. We do not even think about all these value adding steps. So many steps are necessary for something that we take for granted – the car.

 


 

Starting at the beginning of a manufacturer's supply chain, customers indicate their demand for certain amounts and types of the specific product. Manufacturers develop forecasts based on this product demand and place corresponding orders with suppliers. Next, these suppliers produce a variety of different components, from pure raw materials to complex components. Suppliers then ship the amount of material that has been requested by the manufacturer to a specific assembly site or manufacturing plant.

Supply chain management plays a very important role within the company. The supply chain generate most of the costs of the company, due to the width and complexity of the function (manufacturing, warehouse, distribution). Any inefficiency can create tremendous negative impact to the company. On the other hand, good supply chain management can bring huge benefits and competitive advantage to the company.



Materials managers take responsibility for planning and scheduling the flow of these components. They should work closely with production planners to accomplish these tasks. The various components sent by the suppliers are then assembled into a final product, packaged, and sent to a distribution center through some of transportation means.

Manufacturers then use either their own or rented warehouses and distribution centers to store the products. Distributors handle and store the product, while working with their customers. Finally, the product is shipped for retail location and is ready to be purchased.

All this impact the financial health of the company. Companies can achieve higher return on investment if they focusing on their cycle times, and consequently, on their inventory levels. Companies use different inventory management models in order to achieve the most optimal business model.

The supply chain is the largest contributor of the company costs. Every percentage up or down within supply chain create tremendous impact to the overall cost and profitability of the company.

Continue Reading:

Overview of Supply Chain Components
Historical Development of Supply Chain
Traditional and Modern View to Supply Chain
Supply Chain Activities
Procurement
Order Processing
Demand and Supply Planning
Inventory Management
Warehousing
Transportation
Customer Care
Integrated Supply Chain
Product
Information
Financial Resources
Integration vs. Non-Integration

 

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