Supply Chain Management Pt 1: Introduction

The Council of Supply Chain Management Professionals (CSCMP)’s definition of supply chain management:

“Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies.”

Cars, food, phones, televisions, and industrial parts, all of these items the end result of Supply Chain Management.  Even services such as hair salons, car repair, and cleaning services are included.  In this post, we will cover the 3 basic parts of a supply chain.  It begins with a single concept, a commodity or service and the following are the steps taken from raw material to end product in the customer’s hands.

Where do you get your materials? – Procurement

The first part is procurement.  This is the process to receive the materials required to create or service your goods.  This could include raw materials or finished parts.  Procurement has the responsibility to create supplier relationships, understand and control inventory.   As part of supplier relationships, procurement teams or departments have to work with each supplier values.  Each company has different procurement sizes which can include just one purchaser or a full team of specialists.

How do you make it? – Manufacturing & Operations

Image from wiseGEEK

The next section is manufacturing & operations.  These are the steps to create the commodity or service.  Taking the raw materials or finished parts and applying them to the concept.  Design, process, manufacturing, and maintenance are all required in this part of supply chain management.  Even marketing is involved to push the product to customer views.  IT, engineering, accounting, finance, and human resources are all elements in this section as well.

How do you send it? – Logistics & Transportation

MISUMI QCT Central Warehouse

The last part is logistics and transportation.   Determining how your company will keep inventory, transport your product, and packaging your product are key in this step.  It also includes the responsibility of controlling the efficiency and effectiveness of getting the goods to the customer.  Delivery of the end product to the customer brings the supply chain in full circle.

Supply Chain Management can be much more involved.  Companies have to consider the demand in the market, resources both globally & locally, the development in technology, and even different values of their corresponding suppliers.  The ultimate goal in any company is to make a profit but even further in reducing costs.  Also to create value in their product by eliminating waste.  Cost, quality, speed and flexibility.   Some customers will require custom products this factor is also included in the supply chain parts.  Each company has to adapt to these changes and include them in the supply chain, hence why supply chain management can get complicated and requires extensive knowledge of each field, team work, communication between each department and creativity.

Cover Photo by ABB