What is Supply Chain Management?
Supply chain management is a set of approaches utilised to efficiently integrate suppliers, manufacturers, warehouses, and stores so that merchandise is produced and distributed in the right quantities, to the right locations, and at the right time, in order to minimise system-wide costs while satisfying service level requirements.
Table of Contents
- 1 What is Supply Chain Management?
- 2 Future of Supply Chain Management
- 3 Factors of Supply Chain Management
Future of Supply Chain Management
The future of supply chain management can be imagined by focusing on supply chain features. These features have been explained as follows:
- Information Technology
- Environmental Concerns
- Manufacturing Technology
- Social Aspect
- Customer Relations
- Organization Structure
- Human Resource
International markets and rivalry will guide changes in scope, scale and lead times, adding difficulty in planning and implementation. Market profiles influenced by uncertainty will change supply chain plans.
Production capital including trained labourers will be internationally spread, even more, leading to more lead times and uncertainty. International Democratization will lead to new markets hence increasing complexity and lead times.
Small and Medium companies will become part of the international network, and this will require organizational changes. International companies will be supposed as local within each market of existence but at the same time will be sold by their international situation and flexibility.
The rising size of international corporations will require them to be autonomous and learn like a multifaceted natural organism.
If market instability rises then the time to start a new business and goods of high agility will decrease. Increased competition and environmental requirements will re-choir lean supply chains. The increase of recently developed countries will have consumers demanding highly customized goods hence demanding diverse product collections.
The contest will be based on creativity and modernization in all the sectors of manufacturing, to be offered in a short duration of time Fast product innovation will require new suppliers at new sites, new markets, new delivery modes, new information requirements etc.
B2B dealings will be more synchronized with the assistance of technology and better business processes thus more agility in the system can be realized.
Improvement in information distribution and communications will improve competitive weather. Market visibility and communications will rapidly improve to improve the speed of information flow and product traceability. additional real-time applications and decision support systems will be necessary.
The high connectivity of IT-supported systems will allow completing orders from various sources in real-time using effective supply chains. Encroachment of IT will allow quicker organizational learning and knowledge management.
The constant pressure to refill natural resources by increasing design and technology will necessitate modifications in manufacturing and supplier base. Authoritarian norms on recycling will influence supply chain design (reverse logistics).
Reverse logistics will be crucial in supply chain decisions which will engage issues such as product disassembly for reuse, remanufacturing, and product traceability. Independence on natural resources will make supply chains more constant and sustainable.
The constant rise in pressure on supply chains to use environmentally friendly materials in production, distribution, usage and disposal, will affect production techniques and hence the partners.
Extra flexibility in including new technologies in production systems on daily basis will be required. The growing need for better technology and knowledge of buyers will make products more difficult, leading to composite processes and the need for new materials.
All this will require an active supplier base and logistic complexity will be more. The requirements for high-value addition will require highly processed products pushing organizations to go for outsourcing and watch out for new suppliers.
Wide-ranging customer needs and mass customization will force products towards the concept of “reconfigurability”. This will require a supply chain to support for unlimited life of the product. Flexible, reconfigurable, autonomous FMS and self-learning systems will allow people to work with The system rather than on the system.
Testing, inspecting & manipulating at infinitesimal levels of materials will allow quality, durability and recyclability. Tele-manufacturing and direct deposit methods will permit designing and selling of extremely flexible, economical and locally available products in a supply chain.
Nano and biotechnology based manufacturing will help to produce in an environment-friendly mode.
The rising world population will damage the availability of resources and force organizations towards being more well-organized and inventive. Demanding the need for basic human rights will boost the social liability aspect of businesses and thus it will have to be included in the strategy.
Rising insecurity caused by war and terrorism will affect the configuration of alliances and will have an unfavourable effect on supply chain reliability, performance and costs.
There will be a direct relationship between manufacturer and customer throughout the life of the product. Organizations and supply chains will more and more look toward establishing processes to establish trust.
Customers will buy only trusted brands. Value-based facilities will be more significant than physical products so post-sales facilities will cause amplification in supply chain difficulty.
Asset rights will get dissolved in form of mobile assets. Leasing and outsourcing will be most favourite options. Real and virtual joint partnerships will be rapidly made and dissolved as and when the opportunity comes and dissipate new corporate houses will swap hierarchical structure with better networks and teams, working under rules laid by corporate objectives.
knowledge of ideas and practices will be faster and more efficient. life span employment will move towards lifetime employability as the labour force will be more powerful and will move competitive benefits from one organization to another.
Individuals will move independently of specific companies towards skill certification rather than conventional hiring and retraining.
Factors of Supply Chain Management
These are the factors of supply chain management:
What products does the market want? How much of which products should be produced and by when? This activity includes the creation of master production schedules that take into account plant capacities, workload balancing, quality control, and equipment maintenance.
What inventory should be stocked at each stage in a supply chain? How much inventory should be held as raw materials, semifinished, or finished goods? The primary purpose of inventory is to act as a buffer against uncertainty in the supply chain. However, holding inventory can be expensive, so what are the optimal inventory levels and reorder points?
Where should facilities for production and inventory storage be located? Where are the most cost efficient locations for production and for storage of inventory? Should existing facilities be used or new ones built? Once these decisions are made they determine the possible paths available for product to flow through for delivery to the final consumer.
How should inventory be moved from one supply chain location to another? Air freight and truck delivery are generally fast and reliable but they are expensive. Shipping by sea or rail is much less expensive but usually involves longer transit times and more uncertainty.
This uncertainty must be compensated for by stocking higher levels of inventory. When is it better to use which mode of transportation?
How much data should be collected and how much information should be shared? Timely and accurate information holds the promise of better coordination and better decision making.With good information, people can make effective decisions about what to produce and how much, about where to locate inventory and how best to transport it.
The sum of these decisions will define the capabilities and effectiveness of a company’s supply chain. The things a company can do and the ways that it can compete in its markets are all very much dependent on the effectiveness of its supply chain.
If a company’s strategy is to serve a mass market and compete on the basis of price, it had better have a supply chain that is optimized for low cost. If a company’s strategy is to serve a market segment and compete on the basis of customer service and convenience, it had better have a supply chain optimized for responsiveness. Who a company is and what it can do is shaped by its supply chain and by the markets it serves.