Supply chain management is a vital part of every business organization in almost all industries. All the required activities to turn a finished product from the raw materials and deliver it to the customers are included in this department. Supply chain management has five major components, which are also called the five basic steps. The supply chain manager has to look into these five basic steps to ensure the effectiveness and sustainability of the supply chain management department. Nowadays, there have some cloud-based solutions that help to manage all the basic steps. Click on Supply Chain Management in Bangladesh to get that solution.
However, in this article, we will discuss the 5 basic steps of supply chain management. It will help you to know all the required information regarding this topic. So, without any delay, let’s get into the discussion.
What are the 5 basic steps of supply chain management?
The 5 basic steps of supply chain management are planning, sourcing, executing, delivering, and returning. These are also called the five basic components of supply chain management. This total supply chain process is a part of the Supply Chain Operations Reference (SCOR) model developed by the supply chain council. Anyways, let’s explain all the basic steps of components:
Planning:
The first step of the supply chain process is planning. It is the strategic part of supply chain management, also called the blueprint for fulfilling the requirements. It is a very important component for getting the ultimate efficiency in the whole process. For controlling supply, demand, and all other things in the supply chain, a proper plan is inevitable. Supply chain managers generally make and execute this.
Planning involves finding manufacturing facilities, warehousing, determining production level and transport system, and so on. Besides, it also involves improving the whole supply chain and solve all the existing problems.
Sourcing:
Sourcing is identifying and selecting reliable vendors or suppliers. They will provide the needed raw materials to the company to meet the demand most economically and efficiently. Here, the vendors or suppliers need to follow specific requirements to ensure that the company provides good quality service and products. A company should always assess the performance of the suppliers and provide their payments at the perfect time. Sometimes, companies may have to be working with a network of suppliers.
At this time, when you are working with the network, you have must make sure that suppliers are meeting the export and import requirements and, at the same time, manage the company assets and inventory. Sourcing can be of two types of products- perishable and non-perishable. In perishable products, there must be a minimum lead time to support the inventory approach. On the contrary, suppliers' lead time has to be less than the number of days when the inventory reaches zero in non-perishable goods. All these things are included in the sourcing step.
Executing:
The next step involves scheduling the production activities, testing the products, packaging, and then releasing. More clearly, this is the step of all activities for transforming the raw materials into the finished goods according to the customer preferences. In this step, customer feedback is a major part of how a company can improve its products. This executing step is always a space for enhancing continuously, even in this high-tech production line. Here, the company must manage some specific rules for performance and storing all the data.
Delivering:
This delivery step includes all the finished goods processes (customer inquiries, distribution inquiries, transportation system, managing the inventory or warehousing systems, etc.) to the consumers. When the supply chain reaches this step, the manager must deliver the product in perfect quantity, at the perfect moment, and in the ideal location by the delivery partners. A manager must also keep track of the inventory system and, at the same time, payment receipt and invoicing.
Delivering step also includes all the needed activities regarding the trial and warranty period of the products. Here, the company has to make sure that its products meet all the import and export requirements.
Returning:
Returning is the last step of the supply chain management which is concerned with managing all the returned products. It can be defective or returned for any other purpose. The main tasks of returning are, identifying the product condition, authorizing the product returns, scheduling the product shipments, replacing the products, and sometimes providing the refund service.
A supply chain manager must establish some strict rules for return management, including monitoring all the performance and costs of returns and managing the inventory system of returned products. The manager should monitor all these processes and then figure out why these products are being returned and take the necessary steps to reduce returns.
A Final Note:
Supply chain management plays a very significant role in operating key operations for almost all companies. Without successful supply chain management, it is not possible to run a business organization. Some particular steps manage this process. In this article, we have organized a detailed discussion on the 5 basic steps of supply chain management. Hopefully, you now have enough information regarding this topic that you were searching for.
