April 30, 2012

Supply Chain Management Overview

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Supply Chain Process Overview

A supply chain is a network of suppliers, manufacturers, assembly, distribution and logistic facilities that perform the function of procurement of materials, transformational of material into intermediate and finished products and the distribution of these products to customer.

SCM is a systematic approach to manage the flow of information, material and services from raw material supplier through manufacturer and warehouse and finally to the end customer.

SCM has three primary goals: Reduce Inventory, increase the transaction speed by exchanging data in real-time and increasing sales by implementing customer requirements more efficiently.

Supply Chain Stages/Entities

A typical supply chain involves following stages

  • Customer
  • Retailer
  • Distributor
  • Manufacturer
  • Vendors
In this network, finished goods or components move from vendor to manufacturers to distributors and to finally end customer.Cash flow happens exactly in the revers order, from the customer to the vendor through manufacturer.

Supply Chain Cycles

1. Customer Order Cycle
The customer order cycle occurs at the customer interface and includes following processes
  • Customer Arrival
  • Customer Order entry
  • Customer Order fulfillment
  • Customer order receiving and paying for the goods or services
2. Replenishment Cycle
The replenishment cycle occurs at the retailer/distributor interface, which is similar to the  customer order cycle except that the retailer is now the customer.

3. Procurement Cycle
This cycle occurs at manufacturer/supplier interface which includes the following processes
  • Manufacturer orders component from the supplier
  • Supplier ships the component
  • Manufacturer receives the goods and pay for this
4. Manufacturing Cycle
This cycle typically occurs at manufacturer/distributor interface and includes following processes
  • Order consolidation from the warehouse, distributor, customer and retailers
  • Supply chain planning
  • Production scheduling
  • Manufacturing and stocking
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