Tuesday, February 25, 2014

Supply Chain Networks

 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.


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