In case you own a company that develops products from the parts bought from the suppliers and thereafter if the products are sold to the customers then you are part of a supply chain. Even though some supply chains are simple, the other are pretty complicated. Generally, the complexities of the supply chain vary with the size of the business and the number of products that have been manufactured.
Various Elements of the Supply Chain
A simple supply chain is composed of several elements. This is then linked to the movement of the products. A supply chain starts and also ends with the customers.
Customer- It is the customer who starts the chain of events. They decide that they want to buy a product that has been offered for sale by a certain company. The customers get it touch with the company’s sales department which enters the sales order for a certain quantity that has to be delivered. If the product needs to be manufactured then the order will comprise of a requirement which has to be fulfilled by the production facility.
Planning: The requirement prompted by the sales order of the customer is combined with various other orders. The planning department will work to produce a plan for manufacturing the products to cater to the requirements of the customer. In order to manufacture the products, the company needs to buy the raw materials required for the production.
Purchasing- The purchasing department is provided with a list of raw materials and the services which are needed for production by the production department for completing the order. The purchasing department thereafter sends purchase orders for selecting suppliers for delivering the required raw materials. This helps in manufacturing on the required date on the site.
Inventor- The raw materials are obtained from the suppliers and then checked for accuracy and quality. This is then moved into the inventory warehouse. An invoice is then sent by the supplier to the company for the items that have been delivered. There is provision to store the raw material till it is needed by the production company.
Production- Bases on a specific plan, the raw materials are shifted to a production area. The finished product that is ordered by the customer is produced using the raw materials that have been bought from the suppliers. After the item is tested and completed, it is kept in the warehouse before being delivered to the customer.
Transportation- When the final product arrives at the warehouse, it is checked by the shipping agent to decide the most efficient means of shipping. Choosing the right shipping method for international cargo shipping will help in delivering the products on or before the specified date. When the customers receive the product, an invoice will be sent for the products that have been delivered.
Companies have adopted supply chain management process to make sure that the supply chain is operating as efficiently as possible. Supply chain management focuses on three different parts such as operation, tactical, and strategic. However, for supply chain management, a company needs to invest in technology.