Fundamental Supply Chain Processes

Supply Chain in today’s competitive world has become profitability growth engine.  When I was crossing a border one of the immigration agent asked me what is “Logistician”.  I have mentioned my profession as “Logistician”.  If a common man fails to understand what is logistics, it is hard to understand supply chain.  Even today, people ask me what do you do?  When I answer them that I am a supply chain professional, they ask me what is supply chain?  I am writing this article who are new to supply chain world and would like to understand in simple terms. Any Supply Chain will have the below mentioned process in the three steps (i.e., Source; Make and Deliver) involved in achieving the objective of “Ore to Store”.

Planning Process:

The primary objective of this process is to work on demand planning and material scheduling in the Supply Chain.  As we are aware that there are 14 Suppliers supporting the 2 manufacturing bases for this organization.  The distribution network is supported through 3 distribution centres catering to the needs of 30 customer (distributor) locations.  To add further complexity to the whole process, the distributor places the order on a daily basis.  To manage this kind of a Supply Chain, you need a very tight planning.  The planning becomes all the more important when the components/raw material suppliers are very few.  The planning process is done on a weekly basis.

The below given graphic would explain the planning process involved supply chain operations.  It starts from Macro Level Company’s Supply Chain Planning and gets down to activity wise planning.  The objective of the whole planning is the same i.e. to deliver the product to the ultimate user without any hick-ups in the whole process.  Only right planning can achieve this objective.

Execution Process:

The next three activities i.e. Source; Order Fulfilment and Delivery can be grouped into one broad process called Execution.  The activities involved in sourcing, Order Fulfilment and delivering the product is nothing but executing the Plan. Hence, let us combine all these activities and call it as Execution process.  All the activities involved in this process are explained in the graphic given below.

Evaluation Process:

Unless and until, we evaluate all activities periodically against the bench mark or budgets or service standards, we will not be in a position to understand where the organization is heading.  Evaluation process plays a vital role to maintain checks and balances to manage supply chain governance effectively.  I have explained in the graphic the ideal and measurable activities.

Successful supply chain management requires implementing cross-functional processes within the company and integrating them with key stakeholders of the supply chain. The objective of lean and agile supply chain is to avoid wastage. Valuable resources are wasted when supply chains are not integrated, appropriately streamlined, and managed. The supply chain evaluation process plays a key role in avoiding waste and enhancing productivity. The value of having standard business processes in place is that managers from different organizations in the supply chain can use a common language and can link-up their firms’ processes with other members of the supply chain and collaborate, as appropriate.

Cartoon Source: Supply Chain Digest