Supply chain management refers to the control of goods and services through a business. As well as physical items it covers the processes that a business uses to transform raw materials into finished products. Effective supply chain management involves streamlining the supply chains you use for your business to make them as efficient as possible. The savings you generate through this process can be passed on to customers to cement your position in the market.
Supply chain management in action
When done well, supply chain management can speed the delivery and supply of goods at the same time as cutting costs. It is based on the principle that every product depends on several organisations in your supply chain, and the ambition is for each organisation – and your internal structures – to operate at maximum efficiency.
The stages of logistics and supply chain management
Supply chain management can seem complex because it covers every aspect of operations, from sourcing initial raw materials through to the goods or services being consumed. The best way to make effective supply chain management achievable is to break it down into distinct stages. These stages are:
Supply chain management can’t happen without a detailed plan. The plan you draw up needs to examine the demand in the market and current supply trends. Other aspects you need to consider include the working hours involved, the costing, the viability of your production methods and what the expected profit will be.
The effectiveness of any plan you draw up will depend upon the amount and quality of the information you can gather. The trends in the market, for example, need to be current, so you know whether the demand will be there for your intended product, and also what supply options are available.
The information you base your plan on should be good enough to guide you toward the best suppliers. Being ‘best’ means supplying raw materials of the best possible quality but still offer value for money. It also means working with suppliers who can be depended upon to deliver in line with established production timetables.
Keeping an accurate and up-to-date inventory is a vital aspect of supply chain management. The inventory needs to include available stock and required stock, and has to be updated in real time to ensure that the supply chain is always maintained correctly. If the raw materials required aren’t in stock when and where they have to be, then the whole production process will grind to a halt.
All the above stages of supply chain management are needed to ensure that the actual production of an item runs as seamlessly as possible. If planning, sourcing and inventory are handled correctly then the production process can begin with the certainty that the items will be manufactured in line with expectations.
Although businesses now operate as part of a global economy there is no escaping the role that location can still play in supply chain management. A supplier based within short travelling distance of your location will be easier to deal with – on a purely practical basis – than one on the other side of the world, particularly if problems arise.
Arranging transport for raw materials into the production line is linked to the question of location but involves much more besides. Supply chain management also involves arranging the transportation of completed products out to customers. Whether you choose a third-party transport provider or create an in-house solution, the management of this aspect of the supply chain will need to be built around seamless invoicing and logistics provision.
We can help
A key part of any supply chain is the ability to take payments from customers and deal with suppliers. Partnering with GoCardless keeps things as simple as possible and this includes the more complex aspects such as dealing with ad hoc payments or recurring payments.