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• Defining supply management is difficult because of the many processes and disciplines involved. However, the best way to understand it is to refer to it as the aggregate of activities done to ensure a smooth flow of products from production to delivery to customers.
• Managing supply chain activities is essential for the survival and growth of a business. A company’s supply chain will directly affect customers’ view of that business.
• For instance, if a business can make deliveries within 24 hours as advertised, customers will be happy. If they can do this consistently over the years, that becomes a part of their brand equity.
The range and depth of activities in the supply chain management process vary depending on the industry. However, there are overarching goals in any situation. Businesses seek to control operational costs, and the costs of raw materials and production, standardize quality, manage supply chain risks, keep abreast of trends, and operate within regulatory confines. The supply chain process is made up of processes meant to fulfill these overarching goals.
Supply chain management in any company ought to be guided by a corporate strategic plan with endorsement from the highest decision-making organ. Strategic supply chain management fulfills two major roles. First, it establishes a supply chain design of the various activities that need to take place to enable the flow of products. This includes the choice of transportation modes, warehouses and their locations, quality checks, and the establishment of departments and teams to handle such activities.
The other part of strategic supply chain planning is the development of a sourcing strategy. Here, the company determines a methodology for identifying suppliers to work with. It must be clear what goals the company is seeking to hit by working with the chosen suppliers. It could be cost minimization by consolidating their purchasing power to bargain. In other cases, it might be that you want to work with suppliers with the right capacity to deliver the volumes expected of them. You’d also want to ensure that they have in place measures to ensure quality standardization even when volumes are high.
Demand planning is an integral part of the supply chain management process. It’s a continuous activity that involves the choice and use of forecasting techniques. Forecasting requires the company to properly collect historical data. This can be combined with external data to feed the forecasting models in use.
Part of demand planning involves the lifecycle management of products in a company’s portfolio. Given that products are at a different stage in their lifecycle, this informs production and marketing decisions. The company must also account for the short-term effects of product promotion campaigns. Promotional activities should be scheduled correctly to have the best possible impact.
Supply planning involves putting in place a proper distribution network. A company involved in manufacturing or processing should have enough buffer stock of raw materials as well as finished goods to handle shocks in the supply chain. There should also be a plan to ensure items reach the various points of distribution in the right quantities, determined objectively through data. If the company needs to partner with or outsource distribution to third parties, there have to be ways to ensure subcontractors perform as required.
Product Portfolio Management
For a company to enjoy longevity, it has to have a plan for the lifecycle management of its products. Portfolio management requires careful study of trends in customer tastes and preferences. This way, the company can decide when to introduce new products into the market and how to nurture such products. Similarly, data on sales will inform the company when it’s the proper time to withdraw a product from the market. This is known as end-of-life planning.
There are numerous complex scenarios that can arise in companies that have many products in their product line. For instance, two products might be cannibalizing each other and the company may need to withdraw one or reposition both items differently in the market. The company should also constantly monitor the contribution margin for all products in its portfolio. Some products will be cash cows while others might be struggling for profitability. The management has to make important decisions on the struggling products.
Sales and Operation Planning
In the supply chain management process, the sales team is in place to ensure constant engagement between the company and customers. Sales activities are the key drivers of demand for a company’s products. They must be part of the supply chain management process. In fact, reports from the sales team are important feedback for the marketing team. They determine the message and framing of marketing content to the audience.
At the same time, the company has to develop a proper warehousing process, which is a complex process involving the handling of inbound goods and outbound goods. The goal is to ensure efficiency and to keep handling costs at a minimum.
Incorporating Best Practices in the Supply Chain Management Practices
For a company to truly get the best out of its supply chain management efforts, it must make efforts to stay pace with available technology for supply chains. For instance, automating the warehouse management process will provide the management with a dashboard to keep track of inventory levels across all warehouses. Another best practice is to automate demand prediction by building models from available historical data.
Agility is also necessary owing to the dynamic nature of global logistics today. With so many moving parts, supply chain managers must be able to make decisions quickly. Whereas speed is important, having the right information whilst making those decisions is crucial. This is only possible by having tools that enable visibility of the supply chain. Thus, companies need to find the right supply management modules to support their supply activities.
Reach out to ProcurePort for a free consultation on the right tools to augment your supply chain management process. ProcurePort is the world’s leading provider of e-procurement technology.