An Introduction to Supply Chain Management

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					?The mere mention of supply chain management, outside of business circles, tends to
set eyes rolling. While it may not be of interest to the average lay-person, it is an item
of great interest to those in the business community. Supply chain management is a
crucial element of good overall business management. Long term viability and
corporate profitability are critically dependent upon it. Let's spend a few minutes
exploring the basics of supply chain management.

Supply chain management refers to the process by which raw materials are acquired
and used in the manufacturing of a product. It also takes into consideration the
delivery of finished goods, and the ability to process returned goods. Ideally, these
processes should function as an organic whole. The entire point and purpose of supply
chain management is to ensure that products can be produced and delivered in an
efficient and profitable manner.

Supply chain management is comprised of five primary elements; plan, source, make,
deliver, and return. Each of these topics represents five distinct elements of the
production process. The planning stage is the stage in which strategic plans for
production are made. This stage is critically important, as it allows a company to
develop a strategy for managing their production process flow. Metrics are also
established at this time, to ensure that elements of production can be monitored.

The next stage is equally important, as it is an extension of the planning phase. The
source phase refers to the early implementation of the strategic plans decided in the
previous planning phase. It is during this phase that suppliers of raw materials and
components are decided upon. Pricing, delivery, and payment terms are all considered
at this time.

Next, we consider the production phase. This is also known as the start of the
manufacturing process. Production related activities must all be accounted for at this
time. Production, quality control, packaging, and shipping all come into play at this
important stage. This stage is also the most intensive, regarding metrics. Production
output, worker productivity, and overall product quality must be tracked and
monitored closely.

Delivery is the next phase to consider. This area is generally referred to as logistics or
shipping. At this stage, systems must be in place to coordinate orders. Orders must be
processed, tracked, and delivered. It is also important to establish a payment system at
this stage. Other considerations include warehousing, trucking contracts, and
customs-related procedures.
One of the most oft overlooked elements of supply chain management is the returns
process. Naturally, we would like to believe that the products we produce and ship are
flawless. As you know, that is not always the case. Customers are not always satisfied,
and systems must be in place to reintegrate returned goods into the production flow.
Returned goods should always remain segregated until they can be reviewed and
assessed. By adhering to the principles noted above, you can ensure that your
company is sustainable and profitable for years to come.

Jim Staller is a firm believer in responsible business management. When he is not
busy consulting for some of the most successful companies in America, he writes for an indispensable guide to industrial manufacturing and materials,
with information about enterprise resource planning, industrial equipment, spill
containment and more.