Supply Chain Management

Supply Chain Management (SCM) is a science of managing smooth movement of goods and services. It plays a crucial role in efficient functioning of the organization. Hence, is considered as the backbone of the success of an organization. It is a mandatory part for manufacturing industry as compared to the Service Industry as SCM is much more related to and takes care of Manufacturing and Logistic wings of the organizations.

SCM is divided into five major phases listed below:

1. Design
2. Planning
3. Execution
4. Control
5. Monitoring 

1. Designing: This is the first phase of the SCM. In this phase, based on the type of final product and its various attributes like availability of raw material, shelf value, category (perishable / non perishable), manufacturing process, Location of manufacturing plant, Product value, market etc the whole design is prepared as to which mode of transport and packaging methods to be used for raw materials and finished products, Frequency of the transportation etc. For example: if the raw material is perishable and the factory is located far off then the mode of transport should be well equipped in order to maintain the quality of the raw material. Similarly if the final product is an ice cream then cold storage vehicles should be used for distribution of the final product to the local market. The best route to be followed, minimum expense to be incurred for the transportation is designed accordingly based on the Factory, Market and Raw material location.

2. Planning: In this phase planning is carried out to decide how to implement the design prepared for supply chain, packaging, storage etc of the raw materials and the final product. This phase is also useful to identify minor loopholes in the prepared design. This phase also allots budgets for various activities to be carried out for their implementation. For example: if the profit margin per product is not huge and the shelf life is high then cheap mode of transport and storage places with minimum facilities can be used. However, if the Product is expensive and the profit margin is high then the alteration in the mode of transport and Storage is done accordingly. However, it primarily depends on the nature of the product. For example, milk, fish etc. for which the profit margin is not too high but still you need to use and maintain the best quality of mode of transport and storage.

3. Execution: This is the implementation stage where the plan is put to action. Here the actual search for location for setting up Storage place, the features it should adhere to as per the norms mentioned in the planning phase. Here it is decided to Rent the place or own it based on the Budget allotted and to meet the specific requirements of the Organization and the type and product / raw material. Vendor selection for various activities is done in the phase based on pricing, reliability of the vendor and industry norms. Post which the negotiations are done based on the budget available so that requirements can be satisfied at minimum expenditure without compromising on the quality of service for storage and transport of the goods.

4. Control: This is a very important phase as it makes sure that the executed plan based on design and planning works efficiently without any obstructions, overcoming all known and unknown obstacles. Control phase is where various checks are put at various points in the whole process flow of the product from raw material to finish goods. These checks are basically confirmations and precautions taken to accept that the finished good is made from the best quality raw materials with optimum utilization of resources so that maximum profit can be obtained at the same time best quality product is given to the customer.

5. Monitoring: In order to make sure that the set controls are working as expected and the final product is as expected we need to monitor the set controls that they have been followed correctly. Monitoring helps to check the effectiveness of the established controls. Based on monitoring, various reports can be generated which helps the top management to take important decisions to improve the process further.

Thus, it can be seen that SCM holds great importance in accomplishing overall organizational goals and objectives related to lifecycle of the product (Raw material to finished goods). Hence, it is very important to follow all the above mentioned steps to implement and execute Supply Chain Management (SCM) successful.

About Author:

Amol Bhembre is a consultant in Systems Plus Pvt. Ltd. Within Systems Plus, he actively contributes to the areas of Technology and Information Security. He can be contacted at: amol.b@spluspl.com