Supply chain: organization, structure, functions and features

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

The supply chain is the set of steps a company takes to transform raw components into finished products and deliver them to customers. Supply Chain Management (SCM) is a process used by a company to ensure the efficiency and profitability of its supply chain and the firm's operations as a whole.

Stages

One common and very effective model is the supply chain management (SCOR) model, designed to enable managers to effectively improve their supply chain management practices. The SCOR model consists of five stages: planning, development, production, delivery, return.

The initial stage of the supply chain process is the planning stage. A plan or strategy needs to be developed to decide which products and services will meet the requirements and satisfy the needs of the customers. At this stage, planning should mainly focus on developing a strategy that yields maximum profit. After planning, the next step is development. At this stage, mainlyfocus on establishing strong relationships with suppliers of raw materials needed for production. This is not only about identifying reliable suppliers, but also about identifying different methods for scheduling, delivering, and paying for a product. Thus, at this stage, supply chain leaders need to develop a set of processes for pricing, delivery and payment with suppliers, as well as create conditions for control and communication. Finally, supply chain managers can combine all of these processes to process their goods and services. This processing includes receiving and inspecting shipments, transferring them to production facilities, and authorizing vendor payments.

The third step in the supply chain management process is the production or manufacture of products to be delivered to customers. During this phase, products are tested, packaged, and synced for delivery. Here, the task of the supply chain manager is to plan all the activities required for production, testing, packaging and preparation for delivery. This stage is seen as the most metrically intensive block in the supply chain, where firms can assess quality levels, production performance, and labor productivity.

The fourth stage is the delivery stage. Here, the products are delivered to the customer at the appointed place by the supplier. This stage is basically the logistical stage when customer orders are received and the delivery of goods is scheduled. The delivery stage is often referred to as logistics, where firms collaborate to receive orders fromcustomers, build a network of warehouses, select carriers to deliver products to customers, and set up an invoicing system to receive payments.

The last and final stage of supply chain management is called returns. At the stage, defective or damaged goods are returned to the supplier by the customer. This is where companies have to deal with customer requests and respond to their complaints, etc. This stage is often a problematic section of the supply chain for many companies. Supply chain planners need to find an agile and flexible network to accept damaged, defective, and extra products back from their customers and facilitate the return process for customers who are found to have delivery issues.

Functions

Department of Quality Customer Service. This is the first function of supply chain management. It refers to the procurement of raw materials and other resources needed to produce goods. This requires coordination with suppliers to deliver materials without any delay and alignment of all processes in the chain for a successful operation.

Operations

Operating team deals with demand planning and forecasting. Before placing an order for the supply of raw materials, the organization must anticipate the possible market demand and the number of units to be produced. Accordingly, it also sets the movement of the ball for inventory management, production and delivery. If demand isexpected, this may lead to excess inventory costs. If demand is expected, the organization will not be able to meet customer demand, resulting in loss of revenue. Thus, the operational function plays a critical role in supply chain management.

Logistics

This supply chain management function requires a lot of coordination. Production of products has begun. It needs storage space until it's shipped for delivery. This requires the creation of local warehouse agreements. Let's say the products need to be shipped outside of a city, state, or country. This leads to carriage in a loop. There will also be a need for storage at the terminal. Logistics ensures that products reach final delivery without any disruption.

Resource management

Any production consumes raw materials, technology, time and labor. However, all processes must be efficient and effective. This phase is taken over by the resource management team. It decides the allocation of resources in the right activity at the right time to optimize production at reduced prices.

Information flow management

Information sharing and dissemination is what really powers all other supply chain management functions. If the information workflow and communication is bad, it can break the whole chain and lead to mismanagement.

Components of a qualitywork

1. Internal staff (change management).

To get key stakeholders interested in choosing your company and change the course of development to a more favorable one, you must make the transition from the question "Why change?" to “How to change who will be in charge of key processes?”

Change management can't happen in a vacuum anyway: you need to involve a wide audience in the communication and preplanning of the project.

It is especially important to communicate closely with the teams and individuals who will be most affected by the proposed changes, especially the front line staff who actually carry out the process and carry out day-to-day operations. Early consultation and inclusion is important for all stakeholders, but especially for front-line implementers, because they are the ones who can quickly find gaps in proposed changes that can then be more actively considered.

2. Graph of success.

One of the best ways to set your organization up for success when overseeing supply chain implementation is to create and maintain a solid schedule. As you know, basic project management involves managing three things: scope, schedule, and resources.

Introducing changes in stages is another good way to reduce risk. This allows the project team to focus on important tasks and quality work without feeling temporary pressure on the corners. This helps create positive momentum as the project stays on schedule, reachesmilestones and delivering more consistent results step by step.

3. Supplier involvement.

Supplier participation and acceptance is very important for any collaboration project: the success of your system is directly related to the willingness of your suppliers to use it. If you are a big fish in a small pond, your suppliers are usually more "ready" to get involved and use your system. SMBs don't have that advantage, so they need to use it a little more subtly. For them, making the system easy to use and adding value to suppliers is critical.

Regardless of the size of the company, for the long-term success of the supply chain, there must be benefits for all parties. Both parties must feel that they can depend on each other, and this is more than an effective means to an end. This improves the speed, quality and productivity of work.

Logistics and integrated supply chain

This is a process in which each phase from raw material procurement to production, quality control to packaging, distribution or delivery to final delivery is monolithic and inseparable. This is a holistic list of various processes that can be under the complete control of one company or several partners who have come together to collectively control an integrated process. Supply chain integration has a number of benefits, which is why most companies have switched to integrated supply chain management.

Supply management inorganizations

Supply chain management in an organization is essential to the overall success of a company and customer satisfaction. It includes all activities that lead to success from planning inception, management of all activities and sourcing operations to procurement and logistics (transport, warehouse management, inventory management, etc.), marketing operations, as well as coordination and cooperation. between all parties involved in the supply chains of suppliers (outsourcing) and service providers and customers.

Vertical integration

This is the process of expanding your control at different levels of production. You can use backward integration, forward integration, or both, depending on your resources and goals.

Production chain concept

The value chain is the totality of production activities that take place from the processing of raw materials to the transfer of finished products to markets. Michael E. Porter, a well-known business strategist, defines primary and secondary activities as the primary stages of value creation. Primary activities contribute directly to value creation and may include logistics, product promotion and after-sales service. Secondary activities are supporting tools such as personnel, operational infrastructure and procurement processes.

Horizontal Integration

This is an expansion of a business at the same point in the supply chain, either in the same industry orbordering on her. The company can achieve growth through internal expansion. This can happen when a retailer increases the variety of products it sells in a particular category. For example, a barbershop that sells a limited number of shampoo brands might add other brands to their shampoo offerings to appeal to a wider and more diverse customer base.

Merge

The company can also provide horizontal integration through an external extension. This is achieved by merging with another company at the same stage of production. This may allow the company to diversify into additional but heterogeneous product markets. However, if the products the companies are selling are similar, the merger is considered a merger of competitors. A merger is called a monopoly, when all producers of a certain product or service merge, and an oligopoly, when most manufacturers combine into several large alliances.

Logistics and supply chain: universities where you can study them

There are many universities in Moscow where logistics is taught. We bring to your attention a list of educational institutions that provide quality education in this profile:

1. MIIT. There is a faculty called "International Transport Logistics and Supply Chain Management", and there is "Transport Logistics". The difference is that at the first faculty, students study in depth two foreignlanguage. The second direction is intended for applicants with a mathematical mindset.
2. HSE, Logistics and Supply Chain Management.
3. MGAVT, faculty "Technology of transport processes".
4. GTU named after N. E. Bauman, faculty "Management. Industrial logistics".
5. PRUE named after G. V. Plekhanov, faculty "Logistics. Management".
6. MADI, Faculty of Supply Chain Management.
7. GUU, Faculty of Logistics and Management of Transportation Processes.

Conclusion

Benefits of a supply chain management improvement plan:

• You create expectations and perspectives for the organization that are feasible, useful, and will improve the performance of the entire organization.
• You ensure that the necessary assets and resources are available.
• You are synchronizing the organization's overall performance optimization activities.

The system is quite simple and requires maximum concentration and thoughtfulness in its implementation.