The supply chain management is defined as the administrative organization of all the activities involved in the planning, control, and execution of a product’s flow. The activities range from acquiring of the raw materials, production, and distribution of the final products to the consumers. Supply chain management ensures that these processes are streamlined and cost-effective to maximize profits and customer value.
The supply chain management has several components. These components include; planning, source, production, distribution, and the return of goods. Each of these components is discussed below.
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Planning: This is an essential component of supply chain management. It involves laying down a strategy that will ensure that the entire process is cost-effective and beneficial to the organization. In this stage, factors such as the demand for the product or service and the product’s viability in the target market should be considered. Information is vital in the planning process since it helps to identify the demand and supply trends in the target market hence formulating an effective supply chain management system.
Source: The second component of an adequate supply chain management system is the source of the raw materials used in the production process. The raw materials should be acquired at cost-effective prices that are within the budget of the organization (Genovese, Acquaye Figueroa, & Koh, 2017). It is also imperative that the supplier delivers the raw materials within the stipulated time to ensure timely production. The quality of the raw materials should also be inspected.
Production: The third component involves the production process of the final products from the raw materials. The production process should be cost-effective and maintain the quality of products. The products should be entered in inventories and packaged for distribution.
Distribution: This component involves the transportation of raw materials to the production units and delivery of the final product to the consumers. The entire process should be cost-effective and convenient for suppliers and consumers. It is vital to keep inventory records of the raw materials supplied and the products distributed to the consumers.
Return of Goods: An effective system should facilitate the return of faulty goods by the customers. Response to the consumer’s grievances builds trust in the customers and helps the organization to maintain them. The supply chain management process should, therefore, consider putting up a facility to address the consumers complaints.
Challenges Facing the Supply Chain
Customer Satisfaction: - Meeting the consumer needs and preferences is a significant challenge for every supply chain. Consumers prefer quality goods that should be availed to them in a timely schedule. The supply chain must, therefore, meet this challenge.
Cost Control: - The rise in fuel costs affect production and transportation costs. Also, the global labor rates are on the rise, and the supply chain managers must come up with cost-effective plans that will ensure quality is maintained and benefits to the organization are maintained.
Globalization and the Advance in Technology: - The need to meet the needs and preferences of the global market poses another challenge to the supply chain. Also, technological advancement means that organizations must adopt new technology in the supply chain process. This may pose the problem of the rise in the costs which the supply chain managers must address.
References
Genovese, A., Acquaye, A. A., Figueroa, A., & Koh, S. L. (2017). Sustainable supply chain management and the transition towards a circular economy: Evidence and some applications. Omega, 66, 344-357.
