Supply chains are the backbone of any successful business. To compete effectively in any industry, it must have a stable and well-functioning supply chain. The supply chain process entails several essential functions that are integrated for the benefit of an enterprise.
Supply chains are long business channels that can be challenging to develop even for high portfolio investors. Supply chain development can be developed in various ways to create an effective channel. Breaking down the entire supply chain process into the main stages makes it easier for entrepreneurs to create effective supply chains. Supply chain development is carried out by the managers and supply department. All managers should achieve a common supply chain integrated from the manufacturer to the consumers.
The Supply Chain Operation Reference (SCOR)
The Supply Chain Council has a good efficient model that can help businesses develop their own supply chain, the Supply Chain Operations Reference (SCOR). This supply chain model is one of the most used strategies by most enterprises. The SCOR strategy entails using integrated channels and systems to achieve the common supply goal. The model fits different business kinds and can easily suit various business systems. With the SCOR, managers can make strategic decisions quickly. The model integrates the micro-business and micro-business levels to create a unified supply process. It helps cut costs and improves the total revenue.
SCOR model clearly defines the supply chain process and what is expected at each stage. The model is highlighted in five stages;
For any business to succeed, planning and decision-making should be accurately done. Planning for a supply chain covers a broad range of business operations. A business should base its supply chain on its main operations. For instance, they should determine whether they manufacture products directly, acquire goods from other suppliers, or both. Planning entails deciding on the manufacturing location, warehouses, transportation means and facilities, production levels, manufacturing, and supply routes.
Operation planning helps businesses determine the needed resources and what affects the supply chain. Managers should ensure that the supply chain matches the business strategy, workload, budget, and communication. The plan should be flexible to make adjustments to any supply or demand changes to cut on future costs. Entrepreneurs should set strategies that monitor the performance of the supply chain to know its efficiency. Planning is an important stage for a great supply chain. It helps determine the needed resources and what influences the supply chain, such as the supply or demand patterns.
Sourcing entails the business activities in acquiring raw material resources for production. Procurement of resources is a major stage as it determines where the business will be fetching its raw materials. In this aspect, managers should focus on acquiring raw materials of high quality at the lowest market price possible. Time, quality, and quantity are emphasized in this stage.
Suppliers play a key role in the sourcing of raw materials. Businesses should focus on getting their raw materials from quality suppliers to increase and maintain their reputation. The supply chain should schedule the specific time of raw materials supply to keep production going. An efficient supply chain covers the supply of adequate raw materials at the right time and quantity. Any supply chain a business picks should comply with the business’s operations.
This stage entails the business operations in preparation for supplying goods. After planning and establishing the most efficient supply management system, businesses need to implement their plans. The initial step covers the preparation of products to be supplied in testing, packing, labeling, and releasing. Businesses should ensure that the products meet the set standards before any supply. Warehouse facilities should be in the right state of operation. Rules and regulations concerning performance, information stored, and facilities should be established and met. Companies should focus on producing and supplying products based on the consumers’ demands and preferences. A good supply chain system must have a quick feedback medium from the customers. Feedbacks, reviews, and comments help the business determine its strength and weaknesses. The supply chain management is responsible for creating a channel that enhances continuous production all season.
All goods produced need to be supplied to the market. Market demands fluctuate depending on consumers’ preferences. The delivery stage focuses on the operations that impact transporting goods to the right consumers. Consumer inquiries and orders are attended to in the delivery strep. A business must choose a cost-effective transport and distribution system and take goods to the bright market. Warehousing is important to store goods produced before selling and allow more products to be produced. Businesses can hire service providers for inventory or warehousing functions. The cheapest storage form has its own warehouse facility. This saves on extra maintenance costs and provides larger storage space for more production. The delivery stage covers all the stated distribution points, locations, transportation routes, and means. Payments for finished products are taken before any delivery, and import or export charges are met by consumers. The best delivery method should ensure that products reach the intended on time and in the right condition.
Supplying goods is a long and tiresome process. Not all goods supplied will reach the destination at the right condition or time. The return stage deals with all the faulty products returned from consumers. The goods can be returned due to poor quality or quantity, products delivered in bad condition, defective goods sold, shipment preparation, and other concerns that the consumer feels were not met. To counter the problem of products being returned regularly and curb costs, the business must have regulations about the goods to be returned, goods condition, inventory management of goods returned, and tracking costs based on performance.
The Bottom Line
Supply chain development is important for any business to compete effectively in any industry. For a business to make any significant profit, goods must reach the right market. Good supply chain management facilitates consumer satisfaction and delivery of goods at the right time and condition. A well-functioning supply chain covers all the necessary operations with minimum costs to increase total business revenue.