Friday, 7 April 2017

What are the elements of Supply Chain Management?

An efficient supply chain requires all activities across the chain to be coordinated.  One of the main aspects is translating customer demand into activities at each level of the chain. The first element of supply chain management is customers. Marketing is given the task of working out what customers want, how much they will want and when they will want it. Product and service demand need to match up with the wants of the customer and the capabilities of the operations. Each component of the supply chain involves processing. Processing is the core of all organisations. Inventory is another staple in supply chains. Inventories need to be carefully balanced to avoid delays and out of stock issues upsetting customers. Avoiding overstocking is another important task, helping to reduce cost and avoid wastage.

Organisations and suppliers are linked by purchasing. Purchasing is the task of obtaining goods and services that are required to product products and services for the customers of the business. Purchasing has to find suppliers, work out contracts and liaise between suppliers and the internal departments of the organisation.
Three of the key decision areas found in supply chain management are:
  •         Location
  •         Production
  •         Distribution

Location is the decision of where the production, inventory and distribution facilities are located. Production and transport decisions are focused on what the customer wants the quantities and the timing. Outsourcing is an option that can be used, especially in distribution.  The main cost in distribution is transportation. 

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