Supply chain management deals with cut-edge tools and methods in which businesses can be revolutionised. From acquiring raw materials to manufacturing and delivering a product, the supply chain management is responsible for completing orders at the right time while ensuring the highest quality of any product.
As we share our insight on the current landscape and processes that the Chief Supply Chain and Operations Officer overlooks, we aim to outline the seemingly complex process that stands as a critical element to any business. This article will explore the supply chain management strategy while delving into the procurement process.
Table of Contents
- 1 How Does Supply Chain Management Work?
- 2 Overview of Popular Methodologies
- 3 Logistics-Based Methodologies
- 4 Demand-Based Methodologies
How Does Supply Chain Management Work?
Supply chain management (SCM) is an elaborate process that controls the existing incoming and outgoing flow of goods and services. It examines all processes, from acquiring materials needed for making the product to delivering the final product.
It works by optimising the procurement process in a way that is in the company's best interest. While the process entangles numerous management areas, these fields conclude the entirety of the SCM process —strategic planning, procurement, product development, inventory management, and logistics.
Overview of Popular Methodologies
The Chief Supply Chain and Operations Officer looks after the two main areas of SCM, namely logistics-based methodologies and demand-based methodologies. The logistics process consists of a multitude of areas including inventory, transportation, warehousing, and distribution.
Furthermore, it handles the streamlining of resources. On the other hand, demand-based methodologies analyse customer demand and the costs of meeting that demand.
Just-in-time management is a methodology aimed at reducing costs and space related to inventory by storing only items according to existing demand. This process ensures ample use of storage for manufacturing and retail settings.
Cross-docking is a logistics practice where products are received from a supplier and immediately reloaded onto a different vehicle for delivery to the customer. This approach eliminates the need for warehousing, reducing inventory costs and shortening delivery times.
Lean logistics is a methodology designed to increase efficiency and reduce costs by eliminating waste in the supply chain. It focuses on streamlining processes and eliminating non-value-added activities, such as unnecessary handling and storage of products.
Reverse logistics return goods from customers to the manufacturer or supplier. It is used to manage returns of defective or repaired products or dispose of excess inventory.
Supply Chain Visibility
This approach focuses on increasing visibility into the supply chain by leveraging technology such as tracking systems, sensors, and RFID tags. It creates a real-time view of the supply chain, allowing organisations to anticipate and respond to changes more quickly.
Vendor-Managed Inventory (VMI)
Vendor-managed inventory (VMI) is a supply chain management system in which the supplier of a product is responsible for maintaining the appropriate inventory level of that product at the customer's site. The supplier replenishes inventory as it is consumed for forecasting customer demand for the product.
Quick Response (QR)
The Quick Response (QR) method is a supply chain management method seeking to maximise efficiency and minimise costs by using technology and data to make decisions quickly. It is designed to reduce inventory costs, improve customer service, and eliminate waste in the supply chain.
Demand-Driven Materials Requirement Planning (DDMRP)
The Demand-driven MRP is a planning system for managing inventory within a given supply chain. It uses a pull mechanism to adjust inventory levels based on demand signals as opposed to the traditional push system method.
Distribution Requirements Planning (DRP)
The Distribution Requirements Planning (DRP) division ensures the efficient delivery of systems at the right time by combining inventory, sales, and product data. The system creates a plan for product distribution used for both long-term and short-term needs.
Automated Replenishment System (ARS)
As the name suggests, the Automated Replenishment System (ARS) combines the tracking of inventory levels with the automated generation of orders on the fall of stock levels. This automated system ensures the availability of inventory on customer demand.
Warehouse Management Systems (WMS)
The Warehouse Management System (WMS) is an adequate supply chain management strategy that drives companies to manage the storage and movement of inventory within the existing supply chain. It is a software application that can be easily integrated with other systems to generate real-time visibility.
Enterprise Resource Planning (ERP)
Enterprise resourcing planning is a system with demand-based methodologies that handles procurement process management by offering real-time visibility. Apart from procuring, the ERP helps companies source and distribute goods and services.
Advanced Planning & Scheduling (APS)
The Advanced Planning and Scheduling (APS) system is an integrated process aligned with the supply chain for planning, scheduling, and optimising the flow of materials and resources. This process identifies and mitigates supply chain risks and improves customer service expectations.
The popular methodologies used in supply chain management are beneficial to the overall improvement of supply chain operations. Not only do they help to reduce overriding costs, but they also enhance the supply chain and deliver better alternatives to ongoing operations.
Per a report by Grand View Research, supply chain management is projected to grow by a minimum of 11.1% CAGR by 2030. An IIM supply chain management course delves into the intricacies of the supply chain management process while also discussing the skill set and knowledge required to apply these methodologies. Seize the opportunity today and apply for an extensive SCM programme with Imarticus’ Executive Certificate Programme in collaboration with IIM Raipur!
Expertise in supply chain management equips managers with the proper understanding for handling elaborate processes. Furthermore, you can always refer to a supply chain management certification course to ensure that your employers have the best impression of you.