The Importance Of Supply Chain In Business Process

Table of Content

Supply chain via freepick.com

In the past, delivery of products is using estimates and sometimes not following market demand, ranging from inventory arrangement, delivery of products to final fulfillment to the consumer. 

Nowadays the situation started to change because the industry is already aware of the need for collaboration with partners, such as suppliers, distributors, and customers, both business and individual customers. 

Based on that matter, today I will write an article with the topic " The Importance Of Supply Chain In Business Process". Customers and suppliers gathered together in discussing profits, a better need for the supply chain management process in which the system more useful and bring high business priorities. 

Industry actors began to realize that to provide cheap products, quality, and fast, the improvement in the internal manufacturing company is not enough. The role of the supplier, transportation Company and distributor Network is needed. 

The awareness of this product is cheap, fast and quality that makes the birth of the concept of Supply chain management (SCM) in the year 1990.

A manufacturing business is always oriented to ease of obtaining raw materials and achieving cost efficiency, both the cost of materials and production costs. Ease of obtaining raw materials with adequate cost can be achieved through the implementation of "SUPPLY CHAIN MANAGEMENT" (hereinafter called SCM). 

SCM is a concept of handling logistics integrated with the form of raw material supply from suppliers to the distribution of finished products to consumers. In general, SCM is applied to large-scale companies, but The concept of business partnership provides convenience for small-medium scale industries to achieve the desired production efficiency conditions. Creative industries are generally small and medium-sized. 

The creative industries are very concerned with efficiency, especially the cost efficiency of raw materials and productions. Efficient conditions allow the creative industry to produce products at competitive prices, considering that the products of the creative industry must be able to penetrate the market, especially the global market with high competition level. 

One of the competing strengths of a product is the low price level that can be achieved through production efficiency. Creative industries, operate and produce in industrial centers. Not so does the ceramic industry, which is scattered in various regions. 

In general, the ceramic industry is adjacent to the area where raw materials are readily obtained, and the ceramics craftsmen or artists are located. 

The implementation of SCM in the creative industry based on Ceramic Industri is expected to promote the development of the industry because it helps to achieve industrial efficiency, although to implement the SCM model on the creative industries based on the ceramic industry will face various obstacles.

DEFINITION OF SCM

image via pixabay

Supply Chain Management (SCM) is a series of activities that include coordinating, scheduling, and controlling the procurement, production, supply, and delivery of products and services to customers that include daily administration, Operations, logistics and information processing from customers to suppliers. 

A brief explanation of Supply Chain Management (SCM) are a mechanism that connects all parties concerned and the process of changing the raw material into a product. The participating party is responsible for delivering the finished goods to the customer at the right time and place in the most efficient way.

SCM COMPONENTS

In the manufacturing industry, its main activity is to convert various raw materials as well as its supporting materials into finished goods and distribute them to customers. By running these activities, the so-called Supply Chain or supply chain has essentially formed. 

But for a manufacturing company, Supply chain activities need to be run effectively and efficiently so that the management of professionals is required in the implementation. Such management is usually referred to as Supply Chain Management which is often abbreviated with the abbreviation SCM.

As for other simpler definitions, Supply Chain Management is a mechanism that connects all parties concerned and activities involved in the convert of raw materials into finished goods. The relevant party or the activities in question are responsible for delivering the finished goods to the customers at the right time and place in the most efficient way.

So basically, Supply Chain Management is a branch of management involving suppliers, factories or Manufacturers, logistics providers and certainly the most customers.

Supply Chain Management has 3 components, among which is upstream Supply Chain Management is a process by which companies get suppliers from outside parties to obtain raw materials. 

Then the second component is the internal Supply Chain Management which is a process where the change from raw material to a finished product. 

The last component of SCM is downstream Supply Chain Management is a process whereby the distribution of goods by the company to the customer which is usually done by external distributors.

SCM PROCESS

The following is a process in Supply Chain Management that is involved in SCM:

1. Customer

In some companies, the customer is the first link to order. A customer decides to purchase the products offered by the company in question by contacting the sales department of the company. The important information contained in such orders is like the delivery date of the product and the desired amount for the product ordered.

2. Planning

image via freepick.com

Once the customer makes the order he wants, the planning Dept will prepare for production planning to produce the products required by the customer. At this stage, the Planning Department is also aware of the need for raw materials and supporting materials.

3. Purchasing

After receiving production planning, in this case, is the need for raw materials and supporting materials, Department of purchase will make a reservation of raw materials and supporting materials and set the date acceptance and amount required.

4. Inventory

Raw materials and supporting materials that have been accepted by the factory will be inspected for quality and accuracy and then stored in the warehouse for production needs.

5. Production

The production will use raw materials and supporting materials supplied by the supplier to perform the production process to produce finished goods needed by the customer. Finished goods that have been produced are then inserted into the warehouse and ready to be delivered to the customer according to the specified schedule.

6. Transportation

image via freepick.com

The Shipping Department will arrange the scheduled goods departure time (Finished Products) in the warehouse according to the schedule desired by the customer.

We must know, without applying good supply chain managemenet then our business will be far behind the competitors because we will lose the competition to serve and satisfy our customers. 

Let's read more useful article in this blog to increase you knowledge.

Share :