Posted on Aug 23, 2021 at 02:08 PM
About 57% of companies consider supply chain management a competitive advantage that helps them develop their business, as it is defined to plan, organize, direct and control activities to create value. It is a set of processes performed to produce and distribute products.
This supply chain system collaborates between those involved in the supply chain to create value and share the benefit among participants appropriately to encourage them to share. The goal of the system is to improve quality, reduce costs and achieve a competitive advantage. This can be achieved by creating the value chain defined as the development of the supply elements.
Supply chain management can improve the company's profitability and cash flow. They are fundamental objectives of any company seeking to achieve continuity. Some of the objectives that could be achieved according to this management are:
- Increase the satisfaction of customers: The company tries to increases customer loyalty when it increases its ability to deliver products of high quality and low cost.
- Increase efficiency: It simplifies processes by reducing useless processes.
- Develop the process of a good delivery: reduce the required resources and time to deliver products at specified times to the needed locations.
(suppliers, producers, distributors, wholesalers, retailers, consumers....) to increase coordination between supply chain parties. Trust is an essential element in building partnerships, communication, and cooperation between different parties.,
According to the life cycle of the product, the goals of supply chain management and the benefit to be provided vary:
- Start-up: when the product is launched, supply chain management aims to deliver the product to the customer and satisfy its need.
- Product growth phase: when customers' demand increases, the goal is to maximize the size of the supply chain and increase outlets.
- Maturity Stage: When demand volume stabilizes, the goal is to increase supply chain efficiency to reduce cost.
- The stage of declining demand and profits: the goal is to reduce cost, reduce distribution, and increase supply chain efficiency.
According to the goal of supply chain management, it can build a system of relationships between parties of the supply chain:
1- Payment system: It provides products according to the expectation of demand; the goal of this system is to reduce the cost (suitable for maturity and regression stage).
2- Withdrawal system: It provides products in response to actual demand, and the goal of this system is to develop the service it offers. (Fits start-up and growth stage)
3- A mixture of withdrawal and payment systems: the two systems are integrated, preferably used in industries where it is challenging to predict demand. At the same time, the economy of scale has a significant impact on cost reduction.
The Supply Chain Council has developed this model to help managers improve communication, recognition, and development of supply chain requirements, consisting of six elements that can be developed:
1- Planning: at the beginning, it is determined how to measure the achievement, then the company starts to plan and develop the supply chain strategy in accordance with the company's strategy. More than one strategy can be used at the same time, and the strategy gives the following:
- Supply network plan, the flow and quantity of goods.
- The company wants to buy or make product components.
Purchases are made locally or internationally. -
- Manufacturing products are according to the demand or are ready or half-ready before the customer's request, or the product is allocated to each customer.
The software can be used to plan the supply chain network to illustrate the links between organizations and the way materials and information flow, which helps develop them to be more efficient.
2- Purchase: At this phase, relationships are built with suppliers, planning shipping, delivery, and payment to suppliers, setting standards to monitor and develop relationships with suppliers, and regulating the purchase of raw materials and components at the best price, quantity and timing.
Augmented reality technique helps the buyer inspect and maintain assets, and RFID technology can be used to track materials purchased or sent within the supply chain.
3- Location: Choosing the proper location near the resources.
3D printing technology has allowed manufacturing to become available from the consumer's home, reducing storage, shipping, and manpower costs.
Companies that need a buffer in a particular location can use the principle of store sharing, taking advantage of empty space in another company's store for a return.
4- Manufacturing: It includes collection, testing, and packaging activities, rules for completion, identification of manufacturing equipment, data preservation method, and standards for measuring the quality of both the product and workers' task.
Robots can automate processes, reduce packaging and manufacturing time, improve screening, and reduce human error.
5- Delivery: It includes processing customer orders, distribution, and shipment of products, storage, or authorizing a third party to carry out this task for the company and include the trial or warrant period and billing for delivered products.
A warehouse management program could be used to facilitate and reduce the cost of the process, reduce errors, and self-controlled transportation can also be used to reduce financial costs, reduce security risks, increase delivery efficiency, and (Crowd shipping); a technology that includes a network of local delivery providers can speed up the process.
6- Return: It includes defining product conditions, setting a return policy, a schedule for shipping products, replacing and returning the price of products.
Technology could be used to helps delivery
There are several ways to create a supply chain, one of them can be divided into the following steps:
1- Note the opportunity: Enable managers to notice changes in the market and working environment, obtain and analyze customer and market data initially, and big data analysis can also be used for this purpose.
2- Data analysis: Use descriptive and quantitative analysis tools to infer indicators and the pattern of changes that could generate opportunities for supply chain development.
3- Discussion of changes: Discussion of changes by different organizations and disciplines about the impact of changes on various products, processes, and organizations within the supply chain.
4- Organizational learning: Supply chain parties can learn with each other through their work as partners with a culture of constant search for creative opportunities that reduce their costs or give them a competitive advantage, sharing and interpreting information that helps them modify their internal processes and the interaction among organizations.
The expected benefit of supply chain management varies depending on the life cycle of the product and the management system.
This benefit can be created by cooperating among parties taking effective steps to achieve creativity, taking advantage of the existence of a model to clarify the elements of supply chain management to facilitate their cooperation, using tools provided by the technological development of coordination processes to improve quality, reduce risk, and create the supply chain and reduce the costs of their operations.
It is necessary to continuously develop staff by providing them with supply chain management training courses in London, Dubai, Kuala Lumpur or even internally, where they are given the latest means and systems to help supply chain management achieve the best performance.