What are the Key Stages in Supply Chain?


What is a Supply Chain?

A supply chain is the web of all the respective, company, funds, enterprises and technology involved in the formation and sale of a product. A supply chain surrounds everything from the conveyance of source materials from the supplier to the manufacturer through to its consequent delivery to the end user.

A supply chain is a web between a company and its distributor to produce and distribute a particular product to the final buyer. This web includes different enterprises, people, institutions, particulars, and resources. The supply chain also constitutes the steps it takes to get the product or service from its initial state to the customer. Companies expand supply chains so they can decrease their costs and remain competitive in the business environment.

What is Supply Chain Management?

Supply chain management is an important process because an advanced supply chain results in low-priced and a faster manufacturing cycle. Supply chain management (SCM) refers to the inaccuracy and control of all the activities required for a company to change raw materials into finished products that are then sold to customers. SCM provides amalgamate power for the planning, design, producing, inventory, and distribution phases needed to produce and sell a company's products.

A goal of supply chain management is to enhance efficiency by synchronizing the efforts of the various organizations in the supply chain. This can result in a company attaining a competitive advantage over its competitors and increasing the quality of the products it produces, both of which can lead to increased sales and income.

Four Key Stages in Supply Chain

The four stages in Supply Chain are as follows −

  • The introductory phase
  • The growth phase
  • The maturity phase
  • The decline phase

The Introductory Phase

In this phase companies are seeking to gain initial market share, frequently as an outcome of a gap in the market or a failure of a competitive product. Time to market is crucial in this phase and distributors need to be able to answer quickly to accelerating market demands, irregular schedules, and sudden changes in design or operating feature. These suppliers welcome their roles.

An example of a product in an introductory phase would be a newly planned movable blood authority used in the medical industry.

The Growth Phase

Production accelerates all over this phase and associated costs in labor and material demolish as production quantities increase. If the product is successful and market demand is high, there is a continued burden on the acquirement organization to operate the supplier to meet production targets and aggressive cost targets.

In this phase, the movable blood authority has been issued to market and has great undertaking. Demand is high and manufacturing is boosting.

The Maturity Phase

Production slows to consider reduced consumer demand, and the aggregates of parts purchased from suppliers are lower as well, creating quantity-managed upward price control. Materials may also be rigid to get, as distributors work between their own product lifecycle challenges, and those of lower level suppliers.

The Decline Phase

Production amounts continue to fall, as are associated with material purchases. There are distributor challenges as well. Cost of purchase content expands, as the quantities purchased are less and often badly predicted, evolving in special orders and increasing lead times.

Importance of Supply Chain Management in Operations Management

It is well known that supply chain management is an essential part of most businesses and it is necessary to company success and customer fulfilment.

Let us see its importance one by one in detail below.

  • Boost Customer Service

Customers anticipate the correct product variety and quantity to be delivered. Customers anticipate products to be accessible at the right location (i.e., customer satisfaction is reduced if an auto repair shop does not have the required parts in stock and can’t fix your car for an extra day or two).

  • Reduce Operating Costs

Decreases Purchasing Cost − Distributors depend on supply chains to quickly deliver expensive products to avoid holding costly inventories in stores more than necessary.

For example, electronics stores require fast delivery of 60” flat-panel plasma HDTV’s to avoid huge inventory costs.

Decreases Production Cost − Productions depend on supply chains to actively deliver materials to construct plants to avoid material scarcity that would shut down production.

For example, an unanticipated parts shipment delay that causes an auto construct plant shutdown can cost $20,000 per minute and millions of dollars per day in lost wages.

  • Improve Financial Position

Decreases Fixed Assets − Companies value supply chain managers because they reduce the use of large fixed assets such as plants, warehouses and transit vehicles in the supply chain. If supply chain authority can modify the network to properly serve U.S. customers from six warehouses rather than ten, the company will avoid building four very expensive buildings.

Increases Cash Flow − Companies value supply chain managers because they accelerate product flows to customers.

For example, if a company can make and deliver a product to a customer in 10 days rather than 70 days, it can invoice the customer 60 days shortly

Conclusion

In this tutorial, we have discussed about supply chain and supply chain management, and its various stages. Supply chain is the web between the company and the distributors, which provides resources to other companies.

Supply chain management is an important part for every organization as it improves the effectiveness, efficiency, management of resources, etc., it also establishes good and prominent relations with the shareholders like suppliers, customers, etc.

Updated on: 24-Jun-2022

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