An excellent supply chain management process helps businesses avoid costly refunds and lawsuits. The supply chain management process controls and reduces costs and avoids supply shortages. In this article, we will look at how supply chain management works and what the process looks like.
Importance of Supply Chain Management Process
The supply chain management process is important due to the following reasons:
- It helps achieve different business objectives
- Control of manufacturing processes helps improve product quality to reduce the risk of return and lawsuits to build a strong brand
- Control over shipping processes helps deliver the product more quickly to the consumer
Supply Chain Management Process
Supply chain management is a set of steps to convert raw materials into the final product to meet customers’ demands. The process aims to maximize companies’ profits and meet the demand for products or services.
Supply chain management includes all activity required, from production to product development, and the information system needed to handle all these. A typical process of supply chain management includes the following steps:
Planning is the first step in the supply chain process. Here, businesses develop a strategy to address how their products and services will meet the needs of their customers. The primary focus is to design and develop a strategy to ensure maximum profit for the company, while reducing any lag in the supply chain.
A company must design and develop an approach to managing all the resources needed to build products and provide services. A plan and a set of metrics are developed to monitor and assess all activities.
After planning, the next step is the development of products or services. The focus is to build good relationships with suppliers responsible for providing raw materials for production.
At this point, companies must find reliable suppliers and different methods for other functions, such as shipping, delivery and payment. Supply chain managers are responsible for constructing different procedures and metrics to manage and improve supplier relationships.
In this stage, the actual product is manufactured to meet the customer’s demands. Here, the products are designed, developed, tested, packaged, and prepared for delivery. During this stage, the job of a supply chain manager is to schedule all essential tasks for manufacturing, testing, packaging, and preparing for delivery.
The final products are delivered to the consumer at the required destination through the supplier. At this stage, orders from customers are accepted, and delivery of the products is planned. A business collaborates with different firms for:
- Receiving the orders from customers
- Establishing a network of warehouses to deliver products to customers
- Receiving payments
Return is the final stage of the supply chain management process. Here, the customers can return the goods to the supplier. It may happen due to different reasons, such as:
- Refund policy
- Defective products
- Damaged products
For many companies, this is the most problematic phase of the supply chain process, as companies have to deal with many customer queries and respond to their complaints. Supply chain management needs to develop a responsive network for accepting damaged or defective goods returned from customers.
Stakeholders in Supply Chain Management Process
A typical supply chain network includes the following stakeholders: brand owners of the copyrights of the products and their design; suppliers of raw materials to create end products; manufacturers using subcomponents to come up with a finalized product; carriers responsible for moving components, raw materials, and products from one place to another; distributors storing and reselling products to retailers; and retailers offering products or goods to the consumer.
By 2022, supply chains will be managed with different supply chain management systems, such as ERP, warehouse management systems, and management execution systems. These advanced systems help companies speed up the processes in the supply chain and mitigate supply chain disruptions and supply chain issue causes.