A product that can reach the customer needs a route from creation to distribution. That route is called the supply chain process. It makes up the bulk of the order fulfillment process.
What is a supply chain?
A supply chain integrates the processes of supply, production, distribution, raw material procurement, order fulfillment, order fulfillment or transportation services, and delivery of goods to customers. It consists of a chain of many components involved directly or indirectly, built to meet the production of products according to customer needs.
Supply chain management includes planning and managing all sourcing, purchasing, manufacturing, and logistics activities.
Supply chains play an important role in influencing businesses. It directly determines revenue, production activities, and future development direction. Enterprises with good supply chain processes will avoid many operational risks and optimize costs from purchasing raw materials to product prices. Help improve business performance, meet business strategy, and increase market share.
When the supply chain runs smoothly, managing the operations that coordinate the flow of products and services best serves the customer. Enterprises can develop other products and fields but still ensure the development of the system.
Operations in the supply chain
The supply chain includes planning, sourcing, production, and distribution.
Planning includes the steps involved in planning and organizing activities for the other three processes. We need to pay attention to 3 actions:
Forecast of demand: It is necessary to determine the needs of consumers in the market to organize production accordingly. Limit the display of excess melons and inventories.
Product pricing: The price of the product is an essential factor. It determines a part of the customer’s purchasing decision. Whether or not the product is highly competitive also depends on whether the price suits consumers.
Inventory Management: This helps manage inventory levels and quantities. The primary purpose is to reduce storage costs to a minimum, eliminating excess costs in product costs.
Looking for a source
When choosing a supplier, businesses need to compare the strengths and weaknesses of different suppliers. From there, as a basis to select the best supplier. In finding the source of goods, paying attention to 2 main activities: purchasing and selling on credit, is necessary.
It is the most critical activity in the entire supply chain. Production includes three main activities:
– Product design: Design the product’s characteristics and properties following the customer’s needs.
– Setting up the production process: calculating the appropriate production time to meet customers’ needs promptly.
– Vehicle management
It is the stage of delivering the product to the consumer. Distribution includes:
– Order management: update quantity, time, and location from customer’s order.
– Schedule delivery: delivery according to the time specified in the contract. Ensuring the most convenience, optimizing costs, and meeting customers’ needs.
– Return Process: it transports damaged products to the enterprise’s premises for repair or destruction.
Roles in the supply chain
The supply chain includes manufacturers, wholesalers, retailers, and carriers; all have a particular role.
Manufacturers make products but generally do not sell directly to consumers. They deal in bulk to wholesalers. The manufacturer offers a relatively low cost for the product, but with the condition that it has to be ordered in large quantities.
Small businesses, when starting, often have to buy from a wholesaler. After you can afford to order in bulk, buy directly from the manufacturer and store the product at the enterprise’s warehouse.
Wholesalers buy products from manufacturers and sell them to retailers at a higher price. They can order large quantities from the manufacturer and sell them in small amounts, suitable for small business units. Most small businesses buy products from wholesalers because order levels are much lower than the manufacturer’s minimum.
Wholesalers usually only sell to small businesses and retailers rather than consumers.
The unit that sells products directly to consumers is the retailer. And buying products from retailers will cost much more than now from wholesalers or manufacturers.
How products are transported between manufacturers, wholesalers, and retailers is very important. Because depending on the order quantity, choose the most optimal and cost-effective shipping method.
To operate the supply chain effectively, the stages of strategic planning must be detailed. Strategic design plays an essential role in the success of the business. Businesses need to consider and choose a strategy to suit customers’ needs while still ensuring the most optimal and cost-effective.