Supply chain management can be daunting even to the most experienced business person in the world. However, the process can be understood by breaking it down into strategic stages. The five main stages are; plan, source, make, deliver, and return.
These stages together form the supply chain operations reference (SCOR) model which was designed to enable managers address, improve and communicate supply chain management practices effectively.
A successful supply chain management system also involves managing your business processes such as inventory using a cloud-based management software such as NetSuite (you can calculate your NetSuite estimate at Techfino.)
Let’s jump in.
1. Planning
Planning involves many activities. It is the starting point for any successful business operation. If the plan is perfect, then chances are high the operation will be conducted successfully. Planning involves deciding on the network of manufacturing facilities and warehouses, the levels of production and specifying the modes of transport to be used between sites.
Companies should ensure that their supply chain management strategies are in line with their business strategies when planning. They should also decide on the methods of measuring performance and gathering data before planning begins.
2. Sourcing for the Raw Materials
This aspect of supply chain management involves procuring of raw materials and components. Procurement is the acquisition of goods and services at best possible price, in the right quantity at the right time.
Once the sources have selected, companies have to negotiate contracts and determine a time frame within which deliveries are to be made.
The reliability of the supplier must also be assessed and payments released when appropriate.
3. Making
This stage involves scheduling of production activities; products are tested; packing and release. The companies involved must stick to the rules of performance, data that is gathered must be stored for future reference.
The companies that were selected to supply specific products to your company makes these products and packs them in the sizes you requested. The companies ensure that they follow all the guidelines you gave to them regarding the viability of the contract.
4. Delivery
The delivery stage comprises many steps from processing customer inquiries to selecting distribution strategies and transportation modes.
Companies also deal with warehousing and inventory at this stage. If they are not able to keep all the goods in their warehouses then, they can seek services of another warehousing company.
The delivery stage includes a warranty period, therefore customers must be invoiced and payments received. Companies also manage import and export requirements for the finished product at this stage
5. Return
This stage involves managing all the defective products that have been returned by your customers. This stage involves identifying the product condition, authorizing returns, replacing defective products, scheduling product shipments and providing refunds to customers.
Return also includes products that have expired and therefore cannot be advertised or sold by the vendor. Companies must establish rules for monitoring performances and costs, managing inventory of returned products
Final thoughts
Supply Chain Management can be very challenging if you are not familiar with the SCOR model. However, with the five stages stipulated in the Supply Chain Operations Reference model, you can establish a successful supply chain. The SOR model has been proven to effectively improve supply chain practices.
