The implementation of supply chain management processes can improve the efficiency and profitability of a company. There are four major elements: integration, operations, purchasing and distribution. It's important to understand the role each plays, as well as how they work together.
Manufacturing businesses have long referred to the process of getting goods to customers as the supply chain. However, since so many businesses rely on manufacturers, the term has made its way into the corporate world, as well. There are four major elements of supply chain management: integration, operations, purchasing and distribution. Each relies on the others to provide a seamless path from plan to completion as affordably as possible.
Element One: Integration
As with any project, planning is essential to long-term success. Part of good planning is setting up integration, which means that everyone involved in the manufacturing process communicates and collaborates. Instead of functioning in separate divisions, or silos, integrated teams work together to make sure the product gets to the distribution phase. This improved communication reduces errors that cost time and money. Since everyone is working together, leaders can also monitor the entire operation and easily identify areas along the supply chain that can be improved.
Element Two: Operations
As important as strategy is to keeping a strong supply chain, day-to-day operations are the backbone of the work manufacturers do. Managers monitor the work being performed and make sure everything remains on track. Many of today’s manufacturers operate using lean manufacturing strategies, which means that processes are constantly evaluated to identify where things can be done more efficiently. Whether it’s monitoring equipment to make sure you’re getting the most out of it or cutting back work hours when production slows down, the operations team can bring major improvements to the supply chain.
Element Three: Purchasing
You can’t make something from nothing. The purchasing area of supply chain management makes sure a company has everything it needs to manufacture products, including materials, supplies, tools and equipment. This means often staying ahead of the process so that you have everything you need on hand well before you actually need it. Without the right purchasing personnel, you could find that you end up running out of the materials you need, delaying production, or that you overbuy and strain the company’s budget.
Element Four: Distribution
The supply chain ends when the product lands on store shelves where customers can buy them or their front door (if they purchase them online). But getting products there means having a well-planned shipping process. Most companies today use logistics software to manage their shipments, whether they handle it on their own or source shipping to a third-party provider. When handled correctly, products are moved expeditiously from the warehouse to the customer.