TOTAL SUPPLY CHAIN MANAGEMENT

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What is Supply Chain Management?

Supply Chain Management (SCM) is that the management of the flow of products and services from point of origin to point of consumption. As a Lean Organization, Supply-chain management is a cross-functional approach that focuses to manage the movement of raw materials into an organization, internal processing of materials into finished goods, and the movement of finished goods out of the organization and toward the top consumer. As organizations strive to specialise in core competencies and become more flexible, they reduce their ownership of raw materials sources and distribution channels.

SCM is a management approach that integrates Service Functions of an Organization as it covers the following functional areas maintains a desired balance to satisfy all stakeholders of the Value Chain:

Customer-relationship management
Customer-service management
Demand-management style
Order fulfilment

Benefits of good Supply Chain Management:

On time delivery
Higher efficiency rate
Improved quality control
Keeping up with demand
Shipping optimization
Reduced overhead costs
Improved cash flow
Better collaboration

Best practices in Supply Chain Management:

Tierisation of suppliers–it means establishing a tiered hierarchy of suppliers
Reverse logistics/recyclable packaging– it refers to planning, implementing and controlling the efficient, cost-effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the aim of origin for the purpose of recapturing value or proper disposal.
Vendor managed inventory (VMI)– it is an inventory management system where by the supplier determines the product amount and assortment a customer (such as a retailer) needs and automatically delivers the appropriate items
Milk round system – It involves material collection, unloading, and production wiz allocation of trucks at the vendor’s end at fixed frequency/time of movement of trucks based on an exact production requirements in small lots. The collection and supply of material is exactly in tune with the OEM’s production requirements
Hub and spokes arrangement –It is a figurative representation of supplier network established in form of a wheel with a hub and spoke. The consolidation center (Hub) receives material from a number of suppliers (Spokes) and subsequently organizes supplies of the required material to the OEM
Bar coding ,RFID –It means using bar codes and RFID Tags to trace the movement of material across the supply chain so as to not lose value and optimise costs of handling
3PL (3rd Party Logisctics) –It means using third party businesses to outsource elements of its distribution, warehousing, and fulfilment services
4PL (4th Party Logistics) – Many organizations outsorce the complete supply chain operations which are fulfilled by the 4th Party Logictics providers
Cross docking –A practice in transportation of unloading materials from an in-bound vehicle and loading these materials directly into outbound trucks, trailers, or rail cars with little or no storage in betweento combine small loads from different points and redistribute saving on dwell time, storage and costs
Drop shipping – In this technique the supplier ships directly to the end customer rather than to the seller, after due authorization from the latter, saving both time and re-shipping costs
Risk-pooling -In this strategy the suppliers, such as, contract equipment manufacturers (CEMs) aggregate demand from many buying OEM companies and thus reduce uncertainty through pooling of the risks involved with various members at the same level of supply chain