What is the flow of supply chain management?

Information Flow

Request for Quotation, Purchase order, Monthly schedules, Engineering Change Requests, Quality complaints, Reports on supplier performance flows from Customer side to Supplier.

From supplier side to Customer, it would be presentation of company, offer, confirmation of purchase order, reports on action taken on deviation, Dispatch details, Report on Inventory, Invoices etc.

If supply chain has to be successful, constant interaction has to happen between supplier and Customer. In many cases, other partners like distributors, dealers, retailers, logistic service providers are involved in the information network. Further to this, various departments at Supplier and Customers are in the Information loop. Internal information flow within the Customer for in-house manufacture is separate.

It moves typically from Supplier to Customer. It could be through various warehouses among distributors, dealers and retailers. Challenge here is to ensure that material flows quickly without halting as inventory in various points in the chain. Faster it moves, better it is for the company as it reduces cash cycle. For repairs, exchange, at end of life

material can also flow from Customer to Supplier. Finally, finished goods flow from Customer to their Customer through various agencies. 3PL in the process may be there in the picture. Not to forget here, internal flow within the Customer company.

Money flow

Based on invoice raised by supplier, Customer does verification for correctness. If that is correct, money will flow from Customer to Supplier. There could also be flow of money from Supplier to Customer as debit notes. For an efficient and effective supply chain, it is important that all three flows are managed properly with least efforts. For supply chain manager, it is tough task to decide which Information is important for the right decision and he or she would prefer to have visibility of all flows by click of a button. Chasing for Information e.g. level of Inventory ready for despatch is a non-value added activity. In this context, Purchasers will become some time chasers.

SMB context

Let us look at the above flow in supply chain management in typical small and medium size companies where they have more challenges. Lot companies still use manual purchase orders and sent to suppliers through courier or as scanned copy. Practice of PO acknowledgement is poor. Getting Visibility in supply chain is very difficult and for this suppliers are phoned repeatedly for Information. Excel sheets are pre-dominantly used for exchange of Information like level of inventories. EDI usage is not prevalent much. Companies doing export are still using on Excel sheets for various status like shipment details etc. The biggest challenge in all these is there is systematic analysis of past records which makes supplier performance evaluation very difficult. Also too many mail updates to buyers and suppliers will make the reader less sensitive to criticality. Companies using ERP, spends lot of time in invoice verification where Data is entered manually in system from physical invoices. Overall, lot of non-value added activities seen in managing flow in supply chain. There is a huge opportunity to streamline.

The solutions from www.tpsynergy.com will help supply chain partners to manage above flow seamlessly with least effort to make chain robust. Will support to eliminate non-value added activities.

What is supply chain management?

Supply chain management is the handling of the entire production flow of a good or service — starting from the raw components all the way to delivering the final product to the consumer. A company creates a network of suppliers (“links” in the chain) that move the product along from the suppliers of raw materials to those organizations that deal directly with users.

According to CIO, there are five components of traditional supply chain management systems:

Plan and manage all resources required to meet customer demand for a company’s product or service. When the supply chain is established, determine metrics to measure whether the supply chain is efficient, effective, delivers value to customers and meets company goals.

Choose suppliers to provide the goods and services needed to create the product. Then, establish processes to monitor and manage supplier relationships. Key processes include: ordering, receiving, managing inventory and authorizing supplier payments.

Organize the activities required to accept raw materials, manufacture the product, test for quality, package for shipping and schedule for delivery.

Coordinate customer orders, schedule deliveries, dispatch loads, invoice customers and receive payments.

Create a network or process to take back defective, excess or unwanted products.

Why is supply chain management important?

Effective supply chain management systems minimize cost, waste and time in the production cycle. The industry standard has become a just-in-time supply chain where retail sales automatically signal replenishment orders to manufacturers. Retail shelves can then be restocked almost as quickly as product is sold. One way to further improve on this process is to analyze the data from supply chain partners to see where further improvements can be made.

By analyzing partner data, the CIO.com post identifies three scenarios where effective supply chain management increases value to the supply chain cycle:

• Identifying potential problems. When a customer orders more product than the manufacturer can deliver, the buyer can complain of poor service. Through data analysis, manufacturers may be able to anticipate the shortage before the buyer is disappointed.
• Optimizing price dynamically.

  Seasonal products have a limited shelf life. At the end of the season, these products are typically scrapped or sold at deep discounts. Airlines, hotels and others with perishable “products” typically adjust prices dynamically to meet demand. By using analytic software, similar forecasting techniques can improve margins, even for hard goods.

• Improving the allocation of “available to promise” inventory. Analytical software tools help to dynamically allocate resources and schedule work based on the sales forecast, actual orders and promised delivery of raw materials. Manufacturers can confirm a product delivery date when the order is placed — significantly reducing incorrectly-filled orders.

Key features of effective supply chain management

The supply chain is the most obvious “face” of the business for customers and consumers. The better and more effective a company’s supply chain management is, the better it protects its business reputation and long-term sustainability.

IDC’s Simon Ellis in The Path to a Thinking Supply Chain¹ defines what is supply chain management by identifying the five “Cs” of the effective supply chain management of the future:

• Connected: Being able to access unstructured data from social media, structured data from the Internet of Things (IoT) and more traditional data sets available through traditional ERP and B2B integration tools.
• Collaborative: Improving collaboration with suppliers increasingly means the use of cloud-based commerce networks to enable multi-enterprise collaboration and engagement.
• Cyber-aware: The supply chain must harden its systems and protect them from cyber-intrusions and hacks, which should be an enterprise-wide concern.
• Cognitively enabled: The AI platform becomes the modern supply chain's control tower by collating, coordinating and conducting decisions and actions across the chain. Most of the supply chain is automated and self-learning.
• Comprehensive: Analytics capabilities must be scaled with data in real time. Insights will be comprehensive and fast. Latency is unacceptable in the supply chain of the future.

Many supply chains have begun this process, with participation in cloud-based commerce networks at an all-time high and major efforts underway to bolster analytics capabilities.

Evolution of supply chain management

While yesterday’s supply chains were focused on the availability, movement and cost of physical assets, today’s supply chains are about the management of data, services and products bundled into solutions. Modern supply chain management systems are about much more than just where and when. Supply chain management affects product and service quality, delivery, costs, customer experience and ultimately, profitability.

As recently as 2017, a typical supply chain accessed 50 times more data than just five years earlier. However, less than a quarter of this data is being analyzed.  That means the value of critical, time-sensitive data — such as information about weather, sudden labor shortages, political unrest and microbursts in demand — can be lost.

Modern supply chains take advantage of massive amounts of data generated by the chain process and are curated by analytical experts and data scientists. Future supply chain leaders and the Enterprise Resource Planning (ERP) systems they manage will likely focus on optimizing the usefulness of this data — analyzing it in real time with minimal latency.

With IBM Services, you can evolve your supply chain processes into intelligent workflows, to reach new levels of responsiveness and innovation. Challenge siloed processes to uncover efficiencies, enable your teams to execute and deliver, and use emerging technologies like AI and blockchain to unlock opportunities in every step of the value chain — from demand planning to order orchestration and fulfilment.

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