Supply Chain Decision Phases
Have you ever wondered how things reach your home anything from your Food to Gadgets? How are these requirements being made available to you at the right time and right place for purchase? The whole functioning of the supply chain is vast and each of the companies has its own supply chain strategy to become highly responsive to fulfill a customer request. This article is for those enthusiasts who would like to know the decision phases of the supply chain, that come together to make a company’s Supply Chain efficient.
What is a Supply Chain?
Supply Chain is every operation involved in fulfilling a customer’s request. The functions involved in the procurement of raw materials, conversion of raw materials to finished goods, making these finished products available to customers everything makes the supply chain. To make it more simple, when you want to buy a pen you go to Walmart, pick your choice of pen, pay for it, and walk out of the store. This triggers an order request to restock the pen and Walmarts Distribution center sends in the stock at the right time. The Distribution Center replenishes all the orders placed by its Stores and procures more Pens to meet the future demand by placing an order with the Manufacturer. To make a pen the Manufacturer needs Polymers, Metal Nibs, and Corrugated Boxes which will be purchased from suppliers, to meet demand.
Does this look simple, well yes from the outside!
The product you are buying is a simple pen, imagine you need a car. How many of these functions should come together to make a car? How many 1000’s people should communicate and coordinate to fulfill customer demand? The innovation of technology has lead to a new era in the supply chain which is termed “Supply Chain 4.0” to make all these functions communicate better.
Decision Phases of Supply Chain
How do companies decide the right place to set up their manufacturing plants? How do they come up with suppliers, locations of warehouses, and Distribution Centers? To maximize supply chain surplus a company should build an efficient supply chain keeping in mind costs and responsiveness.
1. Supply Chain Strategy
This phase deals with how to structure a supply chain over the next few years, basically a long-term view, which is expensive to reverse. If a company plans to bring in a product in the next two years then it should decide on the following issues
- Location of the facility
- Allocation of resources
- Modes of Transportation
- Outsourcing Decisions
- Information Systems Infrastructure
2. Supply Chain Planning
This is also called a tactical phase which involves the decisions that will be taken over the next quarter of the year by considering market constraints. This phase starts with demand forecasting and policies that govern short-term planning. The key decisions that contribute to effective supply planning are
- Demand Forecasting
- Inventory Policies
- Size of Market promotions
- Markets allocation to warehouse
- Production Planning and Control
3. Supply Chain Operation
Operations deals with the daily and weekly activities related to individual customer demand, with less uncertainty of demand. The Operations at this stage involve
- Inventory Reporting
- Generate pick lists at a warehouse
- Allocate orders to shipments
- Set delivery schedules
To build effective Supply Chain decisions related to Man, Material, Machine, and Method play a key role. These three are the key decision phases to maximize your supply chain surplus by keeping in mind the various costs involved in the short, medium, and long term of the Organization.
Other Sources to get started with Supply Chain
1. Supply Chain Management (6th Edition) by Sunil Chopra, Peter Meindlm
