Definition of ‘Supply Chain Management’
SCM is described as the commodity management and services that comprises of materials, finished goods, work in progress and logistics of finished goods from a certain point to the potential customers (Christopher, 2016). The diagram is as below;
The lifecycle of the supply chain begins from the information sent to get the raw materials for the production process, then work in progress follows to result into finished goods later flow of goods begins from the manufacturer and heads to the retailer, the distributor then to the shopper. The cycle ends when the customer finally gets their products.
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The models organizations use to manage forecasting, planning, and inventory.
It suffices an organization needs to forecast their demand and do planning of their products properly. Once manufacturing occurs, storage is required in inventory for purposes of distribution.
Example includes Amazon.
Forecasting of online sales during the season of Christmas, the company does forecast strategies to have knowledge on their demand. For instance, exponential smoothing and moving averages are used to know what product is in season. This enables the company manufacture its products and do inventory storage for purposes of delivery.
Cost related to logistic and inventory:
It is always important to forecast what is demanded and storage in inventory. This is important as it minimizes the holding and carrying costs. Unsold goods stored for a greater period makes the company incur unnecessary costs.
Logistics:
Knowing what the customer desires, the company usually plans the logistics. For instance, Amazon utilizes their own flights, trucks and cargos to transport their products with reference to their needs. Many factors need to be assessed during the progress of logistics. The order management channel receives the ordered and then sends them to the nearest warehouse. Products are therefore packed and then sent to the delivery targets (Christopher, 2016) . Various functions include purchasing, warehousing, inventory management, transportation, organization and planning of their daily timetables. For instance, if the product is very urgent, then the delivery option would be express option and will hence cost more compared to an average delivery option.
Measurement of performance of the supply chain:
Inventory Management: The main factor in the measurement of the performance of the supply chain is the cost reduction. An effective management makes the company minimize its inventory costs.
Time is vital for measuring performance. The times include:
Processing time
Shipping time
Cycle time
Transit time
Receiving time
Lead time
Queue time
Working capital:
This is measured using:
Security level
Latest technology inception
Effective communication
Customer service level
Sustainability level
Therefore, with different factors any company’s performance on its supply chain is easily evaluated (Christopher, 2016). In conclusion, the life cycle of any supply chain aims at providing solutions to all the parties involved from the supplier to the final user.
References
Christopher, M. (2016). Logistics & supply chain management . Pearson UK.
