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Supply chain management involves managing raw material supplies in manufacturing. Some supply chain managers also coordinate the shipment of individual finished products. Managers are responsible for planning, sourcing and coordinating to balance the supply and demand of raw materials and finished products.
Levels
Senior management is primarily concerned with strategy in the business as a whole, and its position in supply chain management includes production size and type and supplier selection and collaboration. Identifying cost saving methods through supplier and transportation contracts is a part of the tactical process. The company's operational levels are concerned with managing day-to-day activities and decisions, including taking orders from customers, managing inventory, manufacturing products and shipping the products to the final customers.
Links
When a customer purchases a product from a company, like a computer, the planning department must determine what raw materials or finished components must be purchased, assembled and sent to the customer so that the entire product gets there on time. Purchasing will then contact the suppliers to get individual components and raw materials. The inventory function is responsible for warehousing and quality control of the purchased materials. Once the product is manufactured with the raw materials and the individual components are gathered for shipping, the products are shipped to the final customer from the warehouse and shipping department.
Flexibility
Because each company is dependent on its suppliers, each part of the supply chain must be flexible. Customer demand can change quickly, and each piece of the supply chain must be able to respond quickly and efficiently. Keeping additional inventory helps when demand increases unexpectedly, improving customer satisfaction. However, if customer demand is reduced, inventory warehousing costs increase, creating a trade-off between customer satisfaction and inventory. Efficient supply chains reduce lead time through effective communication and coordination between flexible suppliers, providing each piece of the product quickly when new orders are placed. This is often called just-in-time production.
Challenges
In order to measure performance, companies must define their customer service metrics. Individual departments inside the company may also have competing goals, affecting the company's overall performance. Information systems play an important role in coordinating supply chains, and insufficient systems affect planning cycles and demand forecasting. Companies must identify different shipping times from suppliers and ensure that all raw materials are available, eliminating holes in supply chains. Accurate and appropriate inventory practices must be a priority in efficient supply chains.
Levels
Senior management is primarily concerned with strategy in the business as a whole, and its position in supply chain management includes production size and type and supplier selection and collaboration. Identifying cost saving methods through supplier and transportation contracts is a part of the tactical process. The company's operational levels are concerned with managing day-to-day activities and decisions, including taking orders from customers, managing inventory, manufacturing products and shipping the products to the final customers.
Links
When a customer purchases a product from a company, like a computer, the planning department must determine what raw materials or finished components must be purchased, assembled and sent to the customer so that the entire product gets there on time. Purchasing will then contact the suppliers to get individual components and raw materials. The inventory function is responsible for warehousing and quality control of the purchased materials. Once the product is manufactured with the raw materials and the individual components are gathered for shipping, the products are shipped to the final customer from the warehouse and shipping department.
Flexibility
Because each company is dependent on its suppliers, each part of the supply chain must be flexible. Customer demand can change quickly, and each piece of the supply chain must be able to respond quickly and efficiently. Keeping additional inventory helps when demand increases unexpectedly, improving customer satisfaction. However, if customer demand is reduced, inventory warehousing costs increase, creating a trade-off between customer satisfaction and inventory. Efficient supply chains reduce lead time through effective communication and coordination between flexible suppliers, providing each piece of the product quickly when new orders are placed. This is often called just-in-time production.
Challenges
In order to measure performance, companies must define their customer service metrics. Individual departments inside the company may also have competing goals, affecting the company's overall performance. Information systems play an important role in coordinating supply chains, and insufficient systems affect planning cycles and demand forecasting. Companies must identify different shipping times from suppliers and ensure that all raw materials are available, eliminating holes in supply chains. Accurate and appropriate inventory practices must be a priority in efficient supply chains.
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