Table of Contents
Nature of Supply Chains
A supply chain is a complex structure of customers and suppliers, sustained through a transport system. It is a sequence of steps concerned with production, delivering, as well as selling of goods and services to the end consumers. The process starts with the creation of raw materials and ends with the selling of the final products to the user. There is a significant interaction among the buyers, sellers as well the producers. The three agents can take any position in the chain. For instance, a supplier can be a customer at another place depending on the location that they acquire in the chain. Actors like distributors, manufacturers or even customers place orders that need to be fulfilled through transportation (Rushton,2014).
Dealers retain outbound inventory for distribution whereas customers keep inbound stock for consumption. Manufacturers have in-process stocks that are the entire parts that used presently in production. Incoming supply management is the method by which organizations obtain raw materials, components, regions, product, and services from different traders to proceed with their activities. It entails inbound and procurement logistics. Inward supply management profits the company by better planning and forecasting, reducing the cost of purchasing through proficient transactions, getting economies of scale through combining of orders, coordination to distribute risks and inventories reduction(Wisner etal,2014).
In general, supply chain revolves around the processes of producing the products from the raw materials until their sale. All activities involved in a production, changing the products from one step to another are essential. A supply chain cannot be complete if either of the steps is left out. For example, if the final consumer is not available, then there would be no need of producing the item. Similarly, production cannot be possible in the absence of the producer. It, therefore, revolves around the agents for the success of completion. All agents co-exist and behave like if they are all working in the same organization and need to produce the materials to the final stage.
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Scope of Supply Chain
The range of supply chain is immeasurable mainly due to the globalization and the rise of technology. The scope of supply chain management primarily emphasizes on monitoring and managing the movement right from a supplier of the supplier to the customer of the customer. Supply chain management promotes the performance of appreciably in the chain. It mainly observes and controls the activities of the partners and involves; supplier organization, management of inventory, distribution supervision, the productivity of sales force, channel organization, payment regulation, and financial organization. All the functions together make aims at optimal distribution of the final products for consumption by the consumers (Wästlund etal, 2015).
Various principles help explain the scope of a supply chain in details. For instance, the law of customer management that aims at upholding all measures to get more customers and maintain them in the long run. Other principles of supply chain include leveraging of manufacturing and sourcing, relationship management, process integration, as well as strategic alliances. The policies help in defining the width and length of the domain of the supply chain management.
Globalization has contributed to several changes in the scope of the supply chain. It has resulted in several changes in the business to adapt to the new concepts and technologies as a way of coping with the competition. According to Jacobs and Chase, advancements in the information technology field help in managing different situations globally. For this reason, the supply chain is not just a regional matter but a global matter that affects almost everyone in the world.
As earlier stated a supply chain is not restricted to the local regions but is also practiced widely in geopolitical boundaries. In such cases, all activities are at times carried out internationally for the satisfaction of the end users. For instance, planning, production, and selling of goods may all be done in different countries as long as they satisfy the final consumers. In modern days, a firm making readymade clothes buys raw materials from African nations, carries out manufacturing procedures in Asia and puts up the final product in Europe for sale. At the same time, the company’s headquarter is situated in Holland. Such is just a simple example of how the technology changes affect the environment of the supply chain.
Supply Chain Management
Supply chain management (SCM) plays a significant role in development series. The series begins with the planning and designing the product. Plan and design aim at product architecture, arranging whether to make or buy the product as well as early supplier involvement. Sourcing emphasizes establishing a strategic partnership, selecting a supplier and securing contracts with the suppliers to get a continuous flow of the product. After sourcing and supplying the needed materials, production takes place, followed by distribution and selling of the finished goods (Wisner etal, 2014).
Three essential sub-divisions of supply chain management include the flow of the product, information, and finances. The product flow involves the movement of products from dealers to customers and any needs. Information flow concentrates on order transmission and updating the delivery status. Financial flow majors concerning credits, schedules of payment, title ownership, and consignment arrangements. Two main types of Supply Chain Management Software are; planning applications that use highly developed algorithms to conclude the most excellent method to pack an order and Execution application that trail the physical position of goods, material management in addition to financial information relating to all parties (Stadtler, 2015).
The two supply chain use open data models that sustain data sharing both outside and inside the organization. SCM develops time to market goods, lessens costs and permits every party in the chain to run available resources and prepare for future wants through data sharing. An alternative solution for supply chain management that emerged in recent past is web-based applications and websites that recommend e-procurement market where firms and suppliers trade and formulate auction bids.
The core reason for supply chain management is to raise confidence and cooperation amongst the partners. Such collaboration along with trust increases the visibility of inventory and improves the inventory velocity. Thus, to manage the supply chain is synonymous with the supervision of different activities carried out in an environment of a continuous supply chain. Such actions include the forecasting of demand, manufacturing, production planning, obtaining raw materials designed for production, managing inventory, process input for conversion into the output, and planning even distribution of the final products to the consumers.
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Supply chain Competitive
Supply chain competitiveness is the ability of a supply chain to bring value to the clients for competitive advantage’s sake. It is the core factor of interest since supply chains compete instead of firms competing. The whole supply chain can achieve a competitive position concerning the rest of supply chains. Organizations apply various organizations to gain competitive advantage. Successful supply chains practically manage complexities, make plans more frequently and across multiple horizons, employ collaboration to integrate their value chain, use straightforward approach instead of one size fits, and guarantee business needs drive expertise and choice of automation (Farahani etal, 2015).
For it to be competitive, supply chain should be responsive to changes in demand and supply disruption. To this end, it should respond to any changes in appropriate manners. It should have the speed to market by employing the best skills to win the competitors. The quality of the products delivered should be the best. Lastly, it should be sustainable to compete in the market favorably.
Supply Chain E-fulfillment
E-fulfillment entails all activities that take place from when customers’ decision to purchase a product begins; the good is delivered to the client and client is fully satisfied with its functionality and quality. E-fulfillment encompasses order to capture, order processing, pick and pack, ship and after-sale services as well as handling of returns. If products are either modified or made to sort for the client, pick and pack include assembly that can be performed by the third party and e-tailor. The six pillars of e-fulfillment are the organization, planning, solution of Information Technology, inventory, picking, and controls and tools (Nguyen etal, 2016).
Supply Chain Develops
To develop a supply chain plan, one has to consider various activities. According to Gualandris & Kalchschmidt in 2014 one has to follow the right procedure to bring out the best. Managers start with company overview by building up vendor relation, warehousing staffing, and delivery times. The next step is to perform background research by meeting senior managers. The next step is to address every related area and later develop methods to implement the plan.
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A supply chain is a very significant for the success of any organization. Currently, significant steps are made in the process of generating, disseminating and collecting information through the internet. Enormous supply chains are practically observed in every part of processing industries both vertically and horizontally. Starting with complex along with the multi-supply strings found in steel, iron and cement production to products of little values such as vegetables and clothes are getting into supply chain domain beyond the nations’ boundaries. Thus, it has created different jobs in the area of inventory control, distribution, procurement, strategic planning, and transportation. Thus, the scope, management, and competitiveness of supply chain expand daily with globalization and are key edges of business’ competitive.
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