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The 5 Basic Components of Supply Chain Management

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Companies employ supply chain management to guarantee that their supply chains are efficient and cost-effective. A supply chain is the series of procedures taken by a corporation to convert raw materials into finished goods. Below are the five essential components of supply chain management.

  1. Plan

The planning stage is the first step in the supply chain process. In order to address how the products and services will satisfy the expectations and necessities of the clients, we must design a plan or strategy. At this point, the planning should primarily focus on devising a profit-maximizing approach. Companies must develop a strategy to manage all of the resources required for designing products and offering services. The major emphasis of supply chain management is to plan and construct a set of KPIs.

  1. Develop (Source)

Following the planning, the next phase is to develop or source. At this point, we’re primarily focused on forging strong ties with suppliers of the raw materials needed for production. This entails not only locating reputable suppliers, but also determining various shipping, delivery, and payment methods for the product. Companies must choose suppliers to provide the materials and services they need to develop their products. As a result, supply chain managers must build a set of pricing, delivery, and payment processes with suppliers, as well as metrics for monitoring and strengthening relationships, at this point.

Finally, supply chain managers can combine all of these procedures to manage their inventory of goods and services. Receiving and inspecting cargo, moving them to manufacturing facilities, and authorizing supplier payments are all part of this process.

  1. Make

The production or making of customer-demanded products is the third step in the supply chain management process. The products are created, manufactured, tested, packaged, and synchronized for delivery at this step. The supply chain manager’s job is to schedule all of the tasks required for manufacturing, testing, packaging, and delivery preparation. This is the most metric-intensive step in the supply chain, where companies may assess quality, production output, and labour productivity.

  1. Deliver

The delivery stage is the fourth stage. The supplier delivers the products to the customer at the specified location. This is essentially the logistics stage, where consumer orders are accepted and goods delivery is scheduled. The logistics stage, where organizations collaborate to collect orders from clients, construct a network of warehouses, select carriers to deliver products to customers, and set up an invoicing system to receive payments, is often referred to as the delivery stage.

  1. Return

The return is the final and most important stage of supply chain management. The customer returns defective or damaged items to the provider at this step. Companies must deal with client inquiries and concerns, among other things. For many businesses, this stage of the supply chain is a source of frustration. Supply chain planners must develop a responsive and adaptable network for accepting damaged, faulty, and additional products from customers, as well as expediting the return procedure for customers who have concerns with delivered products.

Whether handling day-to-day product flows, returns or an unanticipated disaster, supply chain experts identify problems, work around them, and deliver essential products to customers as efficiently as possible. Our Procurement & Supply Chain Management course equips you with skills to become a supply chain expert. Enrol with us today for more knowledge regarding supply chain management in businesses.


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