Supply chain management is a combination of two processes. One is material management and another is physical distribution. In the present situation, lead time is a big fact. Because lead time depends on market coverage.
Some firms’ supply chain condition is really very poor. Because their supply chain system is not automated. Another problem is that suppliers mostly depend on the nature of the environment.
In supply chain management, all parties are directly or indirectly involved with each other to fulfill the demand of consumers. It does not include only the manufacturers and suppliers but also agents, brokers, retailers, wholesalers and customers themselves. In organizations, the supply chain involves receiving and fulfilling customer demand. It may be new product development, marketing .operations, distribution, finance, and customer service.
For example, a customer goes to Wal-Mart to buy detergent. The supply chain started with the customer and his need for detergent. The next stage is to visit customers in a retail store. Wal-Mart stocks its shelves using RFID tag inventory management. This tag is directly related to the supplier. It informs suppliers about the existing product of Wal-Mart.
Supply chain management is a dynamic process. It is involved with the constant flow of product, information, and funds among different stages. See an example, Wal-Mart provides product to the customer. Besides it also provides low pricing and availability of information to the customer. The customer purchase goods from Wal-Mart. Moreover, Wal-Mart collects goods from its suppliers.
The suppliers of Wal-Mart are so responsive. They are quickly distributing their products to the customer. Besides they also provide pricing information to Wal-Mart. Along with pricing information, they also send delivery schedules. Moreover, Wal-Mart also sends backpacking material for recycling. The supply chain occurs with similar information, material, and funds.
A customer can make a purchase from online say Amazon. In that case, the supply chain includes Amazon website, Amazon warehouse, Amazon suppliers and customer itself. The Amazon website provides the information to the customer regarding product pricing, quality, feature and much other information like ordering process etc.
It is true that a customer is an integral part of the supply chain. In fact, to satisfy customer needs is the primary function of supply chain management. In this process, it helps to generate profit.
The term “supply chain’” indicates that the moving of goods and services from manufacturer to customers through a chain. Sometimes we can also see moving of goods from suppliers to the manufacturer to distributors to retailers to wholesalers to customers along a chain. This is certainly a real scenario of the supply chain.
But it is also important to understand the real information, scenario, funds, and product flow along with the directions of the supply chain.
In the real world, a manufacturer can receive raw material from many suppliers . or he may provide too many distributors. Thus more supply chains are actually networks. it will be more accurate to call the supply chain as a supply network or supply web.
A typical supply chain has a variety of stages including-
- Customers
- Retailers
- Wholesalers
- Manufacturers
- Raw material suppliers
All stages are interrelated through the flow of products, information and finds.