SCM Process Overview – Supply Chain Management

A supply chain is a network of supplier, manufacturing, assembly, distribution, and logistics facilities that perform the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these products to customers.

Supply chain management (SCM) is a systematic approach to manage the entire flow of information, materials, and services from raw material suppliers through factories and warehouses to the end customer. SCM has three primary goals: Reduce inventory, increase the transaction speed by exchanging data in real-time, and increase sales by implementing customer requirements more efficiently.

A typical supply chain involves the following stages or entities ..

  • Customers
  • Retailers
  • Distributors
  • Manufacturer/Enterprise
  • Vendors

In this network, Finished goods or components move from Vendors to Manufacturer to Distributor to Retailer to finally the End customer. Cashflow happens exactly in the reverse direction from Customer to Vendor through Manufacturer etc.

The supply chain process can be broken down into following four cycles viz: Customer order cycle, Replenishment cycle, Manufacturing cycle, Procurement cycle. Each cycle occurs at the interface between two successive stages or entities of the supply chain.
  • Customer Order Cycle
The customer order cycle occurs at the customer/retailer interface and includes following processes viz:

    • Customer Arrival
    • Customer order entry
    • Customer order fulfillment
    • Customer order receiving and paying for the goods or service.
  • Replenishment Cycle

The replenishment cycle occurs at Retailer/Distributor interface, which is similar to the customer order cycle except that the retailer is now the customer.

  • Procurement Cycle

The procurement cycle occurs at manufacturer/supplier interface which includes the following processes viz:

    • Manufacturer orders components from supplier
    • Supplier ships the components
    • Manufacturer receives the goods and pays for this
  • Manufacturing Cycle

The manufacturing cycle typically occurs at the distributor/manufacturer interface and includes the following processes viz:

    • Order consolidation from Warehouse, Distributor, Retailer or Customer
    • Supply chain planning
    • Production scheduling
    • Manufacturing and stocking

Supply Chain

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