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Faizan
Supply chain management oversees getting a product to a consumer. A supply chain is a web of connectivity with a product that starts in its most rudimentary form and after countless transactions and processes becomes a finished good. The service industry is no different than any other. Four governing principles exist for a supply chain: production processes, active management, risk sharing and forecasting.
Production Processes
Think of a supply chain as a web. "Practically every product that reaches an end user represents the cumulative effort of multiple organizations. These organizations are referred to collectively as the supply chain," according to North Carolina State University's Poole School of Management. What links these organizations together are the physical and informational flows. Physical flows are the transformation, movement and storage of goods and materials. Consumers can see a physical flow in tractor trailers, factories and workers.
Informational flow is how organizations communicate and coordinate with each other. Processes such as e-mail, phone contact and face-to-face meetings are examples of informational flow. Informational flow ranges from long-term plans to everyday movement of goods and services through the supply chain. Consumers aren't as likely to see information flow as physical flow.
Strong Leadership
Leaders must be active in the supply chain, according to North Carolina State University's Poole College of Management. Inefficiency can enter into a supply chain quickly and reduce profits. Active managers need to monitor development, sourcing, production and logistics. For as easily as inefficiency can enter a supply chain, ridding it from the supply chain boosts profit by as much as $12 per good, according to Syracuse University's Whitman School of Management.
Share Risks and Rewards
A supply chain's growth depends on change and innovation. This is best done with long-term projects, and it can yield increased revenue. But the increased rewards must be shared equally with all organizations in the supply chain, John T. Mentzer wrote in his book "Supply Chain Management" that if rewards are shared unequally, the supply chain can break down, and the organizations will stop cooperating successfully. "The sharing of rewards is a very, very difficult equation to solve. Everyone is right there conceptually, but the minute you move one dollar from one organization to another, unless you can show where another dollar is coming back . . . it's a morass," one business executive told Mentzer.
Forecast
To plan well, a supply chain manager must know what he'll face. He knows what his company does well and what it fails to do well. And he knows what has been costing the most in the supply chain. "The best companies know where they hold their costs and why, so that's where they focus their best practices and technology investments," wrote David Blanchard, editor in chief of "Logistics Today," in the book"Supply Chain Management Best Practices."
Production ProcessesThink of a supply chain as a web. "Practically every product that reaches an end user represents the cumulative effort of multiple organizations. These organizations are referred to collectively as the supply chain," according to North Carolina State University's Poole School of Management. What links these organizations together are the physical and informational flows. Physical flows are the transformation, movement and storage of goods and materials. Consumers can see a physical flow in tractor trailers, factories and workers.
Informational flow is how organizations communicate and coordinate with each other. Processes such as e-mail, phone contact and face-to-face meetings are examples of informational flow. Informational flow ranges from long-term plans to everyday movement of goods and services through the supply chain. Consumers aren't as likely to see information flow as physical flow.
Strong Leadership
Leaders must be active in the supply chain, according to North Carolina State University's Poole College of Management. Inefficiency can enter into a supply chain quickly and reduce profits. Active managers need to monitor development, sourcing, production and logistics. For as easily as inefficiency can enter a supply chain, ridding it from the supply chain boosts profit by as much as $12 per good, according to Syracuse University's Whitman School of Management.
Share Risks and Rewards
A supply chain's growth depends on change and innovation. This is best done with long-term projects, and it can yield increased revenue. But the increased rewards must be shared equally with all organizations in the supply chain, John T. Mentzer wrote in his book "Supply Chain Management" that if rewards are shared unequally, the supply chain can break down, and the organizations will stop cooperating successfully. "The sharing of rewards is a very, very difficult equation to solve. Everyone is right there conceptually, but the minute you move one dollar from one organization to another, unless you can show where another dollar is coming back . . . it's a morass," one business executive told Mentzer.
Forecast
To plan well, a supply chain manager must know what he'll face. He knows what his company does well and what it fails to do well. And he knows what has been costing the most in the supply chain. "The best companies know where they hold their costs and why, so that's where they focus their best practices and technology investments," wrote David Blanchard, editor in chief of "Logistics Today," in the book"Supply Chain Management Best Practices."
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