The power of supply
chain has been realized by the industry however it did take them a long time to
look beyond their product and services. A good understanding and management of
the supply chain can provide vital information to the business. It is not only
about how a product or raw material is moved from point A to B but it also
gives you information about the demand and supply. Today supply chain
management is broadly understood as bringing the right product to the right
customer at the right time in the right quantity for the right value.
As easy and simple as it may sound; supply chain is not an area that has been mastered. It is dynamic, ever changing and ever evolving. The decisions involve areas as big as inventory management and logistics to as small as how the packaging should be done? Do you use bubble wraps or foam wraps? Let us take an example of transportation of goods; we come across questions such as using in house transportation versus outsourcing the job. And each of these options has various pros and cons to itself. While in house transportation means a stronger hold on the execution of the task, outsourcing means giving the job to a company who is an expert on the subject and could save the company a lot of money. On the other hand, supply chain management also plays a major role in the production front. A business has to optimize the incoming of raw material which of course has a direct impact on costing of production.
This brings us to the
topic of supply network; both incoming and outgoing for the business requires a
thorough knowledge on the subject. Information ranging from road tax or
shipping cost to availability of transportation from source or to destination.
It may be a fantastic idea to sell sand duster to islanders but how easy is it
to transport your sand duster to the island? What will be the selling cost at
the destination? Or should you manufacture your jeans from cotton grown at
place A or is it a better idea to manufacture it from the waste produced by the
locals. Now if the company does come to the conclusion of either selling the
sand duster to the islanders or manufacturing jeans from cotton, a whole new
world of logistics opens up. It is here that the company decided on the actual
supply chain network. A company may opt for one mode of transportation or a mix
of it. The sand duster could be moved from point A to B by road and then from B
to C by either air or sea. Or it could be moved from A to C by air. And it is
all these decisions that lead to strategies that make or break the business.
Supply chain, like many
other business strategies, is also not one that can be decided upon once and be
forgotten about. It has come to a point that business are hiring supply chain specialist
to give them a competitive edge.
References
http://www.thesupplychainnetwork.com/
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