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Supply Chain and Operations Management Can Be Integrated
When designing, producing, and providing after-sale support for a final product, a group of customers and suppliers collaborate to maximize their total results. It may be beneficial to imagine the contributors as the parts of a huge, vertically integrated organization, even if the several enterprises in the network are only linked by mutual trust, common objectives, and voluntarily entered into agreements. Unlike dependent contractors, independent suppliers typically manage the competing needs of many customers.
The degree of supply network integration varies for each. Increased integration aims to maximize the performance of the supply chain as a whole by concentrating and coordinating the pertinent resources of each participant on its demands.
Describing the Supply Chain
The complete process of acquiring a product from its conception to the client is covered by the supply chain, which consists of all the essential tasks, people, organizations, data, and assets. For instance, this is likely to entail the purchase of natural resources, manufacture, packaging, shipping, storage, and sale in the market for consumer goods. The sole objective is to keep supply and demand among all participants in the supply chain balanced in order to meet the consumer's demand.
There are many different uses, purposes, and definitions for the phrase "supply chain." It contains −
Cycle that a finished good goes through from purchase to fulfillment under the supply chain theory.
Sector of the economy in charge of setting standards and carriers for moving commodities.
The activity of managing operations, logistics, and inventory levels as part of coordinating customers and suppliers is known as the function.
Supply chain management should be a key element of corporate strategy since these procedures and tasks, when carried out effectively, may provide value to any sector of the economy.
Example − Henry Ford employed assembly lines to hasten the manufacture of a single car type in a single color, but automotive manufacturing has gone a long way since then. Tesla is now producing innovative, wildly successful, and luxury automobiles right here in California, a place with extremely expensive real estate, at a time when even American automakers are opening manufacturing abroad.
Instead of having a lengthy supply chain of low-cost part manufacturers, Tesla has a vertically integrated supply chain that includes a full-service car plant close to its corporate headquarters, plans for a supplier park, and a sizable battery facility. Tesla also owns all of these facilities.
What is Supply Chain Management?
In order for the different participants and channels in the supply chain to cooperate as effectively and efficiently as possible, supply chain management is the process of integrating supply and demand management across all of them, not just within the firm.
A supply chain management system is made up of these five fundamental elements −
Management of the supply chain must be proactive in order to satisfy client requests. Ensuring that the supply chain is operating as expected in terms of efficiency, providing value for customers, and assisting the organization in achieving its goals, entails forecasting demand, designing the supply chain intentionally, and deciding how the organization will measure the supply chain.
A crucial step in the supply chain is choosing the suppliers who will deliver the products, raw materials, or services needed to generate the final product. This involves managing and keeping an eye on current partnerships in addition to writing the contracts that regulate the providers. Supply chain managers must supervise the procedures for placing orders, receiving deliveries, monitoring inventories, and approving payments for supplier invoices as part of strategic sourcing
Managers of supply chains should also assist in organizing all the procedures taken to produce the product. In this, the manufacture of the product, testing for quality, and packaging are all included. To make sure that general standards are followed, organizations often examine the quality, production output, and personnel productivity.
Logistics plays a crucial role in the performance of the supply chain by ensuring that the items reach the clients. This comprises organizing the orders, planning delivery, sending out, billing, and collecting payments. The majority of the time, a fleet of vehicles must be managed to transport the goods, from tankers delivering goods produced abroad to fleet trucks and parcel services managing last-mile delivery. In certain instances, businesses contract out the delivery process to other businesses so they can manage house deliveries or specific handling needs.
Supply chain managers must establish a network to aid in the handling of returned items. This can include sending a product back to the warehouse in certain circumstances or scrapping or producing a defective product in others. The network must be trustworthy and flexible in order to satisfy customer needs.
Each of these elements is built on a solid foundation of supporting processes that can effectively monitor the information across the supply chain and guarantee compliance with laws and regulations. The HR, IT, QA, Finance, Product Design, and Sales departments are just a few of the departments involved.
Operations and Supply Chain Management
Operations and supply chain management (OSCM) is an all-encompassing phrase that covers both the industrial and service industries. It encompasses tasks like order fulfillment, demand forecasting, distribution, logistics, retail, sourcing, materials management, and more.
It covers everything that occurs along the path taken by goods from suppliers to ultimate consumers.
Every environment-the government, financial institutions, educational institutions, and healthcare facilities-consumes or sells things, and they all need raw materials or finished items to run.
A supply chain is engaged in the use of these commodities, their processing, and even the provision of services to clients who are consuming those products. Professionals in these disciplines also try to improve efficiency through procedures. All of these environments have a role for operations and supply chain specialists.
The following are some examples of supply chain activities − design, production, building, packing, and shipping.
With integrated planning and visibility being a top goal for many logistics firms, supply chain integration has evolved from a business need to one of the key focal areas for improving competitive advantage. There are considerable benefits to doing so. Smarter business decisions are made possible through integrations and collaborations with carriers and supply chain partners that provide users access to a range of real-time data and the ability to see across supplier networks.
A vital corporate strategy in times of rising market uncertainty is seamless, cross-organizational supply chain integration. Businesses that go paperless may significantly save costs, boost productivity, and provide top-notch customer service.
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