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Definition of Supply Chain Management According to Experts

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Definition of Supply Chain Management According to Experts
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DEFINITION OF SUPPLY CHAIN ​​MANAGEMENT

Some basic definitions of Supply Chain Management are as follows:

  • Simchi and Levi (2003): "Is a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouse and stores, so that merchandise is produced and distributed at the right quantities, to the right locations and at the right time, to minimize system-wide cost while satisfying service level requirements. "
  • Hanfield (2002): "Is the integration and management of supply chain organizations and activities through cooperative organization relationships, effective business processes, and high levels of information sharing to create high-performing value systems that provide member organizations a sustainable competitive advantage".

In the previous operational definition of the supply chain, three aspects need to be considered, namely as follows.

Supply Chain Management is an approach used to achieve an efficient integration of suppliers, manufacturers, distributors, retailers, and customers. This means that goods are produced in the right quantity, at the right time, and at the right place to achieve system costs minimum overall and also achieving the desired level of service.

Supply Chain Management has an impact on control cost.

Supply Chain Management has an important role in improving the quality of company services to customers. Supply Chain Management involves many parties in it, either directly or indirectly to meet consumer demand. Here the supply chain does not only involve manufacturers and suppliers but also involves many parties, such as consumers, retailers, wholesalers, producers, and product transporters.

INVENTORIES IN THE SUPPLY CHAIN

There are several types of supplies, namely as follows:

Raw materials

The first link is in the factory that makes this raw material, and the last link is in the factory that makes the final product (not in the final consumer). This raw material in the final product manufacturing plant is combined with auxiliary materials, and with certain technology, it is processed into semi-finished and finished materials.

Work-in-process product

The beginning of the chain is in the factory that makes the finished material. As previously explained, the semi-finished material is the result of the raw material process. Semi-finished materials can be processed directly in the same factory into finished materials, but can also be sold to consumers as commodities. 

So, the end of the chain will depend on the above, it can be short and it can belong. The end of the chain is the end-user or buyer of the product. Inventories of this type are supplies that are used to support the factories that manufacture the finished goods,

namely for the maintenance, repair, and operation of the factory equipment. The chain starts with the MRO material manufacturer and ends with the manufacturer of the finished goods, as the final user (manufacturer).

Commodity goods (commodity)

This type of supply is goods purchased by a particular company already in the form of finished goods and traded, in the sense that they are sold back to consumers. In these companies, these goods can be processed again, for example changing the packaging or shrinking the packaging, but can also be sold again directly in the original form as when purchased. This supply chain

type starts with the manufacturer of the commodity and ends with the end consumer who uses the item. Commodity goods are sometimes also called resale commodities because they are indeed bought to sell for a certain profit.

Project goods

This type of inventory is the materials and parts used to build a particular project, for example, to build a new factory. The long-chain is almost the same as MRO materials, so it starts with the manufacturer of these goods and ends with the company that manufactures the finished goods in question.

SUPPLY CHAIN ​​BUSINESS PROCESS

We can describe Supply Chain Management as below:

Customer Relationship Management (CRM)

The first step of supply chain management is to identify key customers or customers who are critical to the company's trade mission. The business plan is the starting point for identification. The customer service team creates and implements joint programs, product, and service approvals are set at specific performance levels to meet customer needs. 

For new customers, better communication and predictions are developed based on customer requests. Then the customer service team works closely with the customer to identify and eliminate sources of demand variability. Finally, managers study these evaluations to analyze what kind of service will be provided to the customer as well as the benefits obtained.

Customer Service Management (CSM)

The single source of customer information that manages product and service approvals. Customer Service informs customers of information about delivery dates and product availability based on information from the production and distribution department. After-sales service is also necessary, the point is to efficiently help customers regarding product applications and recommendations.

Demand Management

This process must balance customer needs with the company's supply capabilities, determining what customers will buy and when. A good demand management system uses point-of-sale data (which is described in logistics management) and “core” customer data to reduce uncertainty and streamline the supply chain.

Customer Demand Fulfillment: this process of completing orders effectively requires the integration of the work plan between product, distribution, and transportation. Relationships with colleagues, namely primary members of the supply chain and secondary members are needed to meet customer needs and reduce total shipping costs to customers.

Manufacturing Flow Management

Usually the company produces goods which are then brought to the distribution department based on historical forecasts. Products are produced to meet production schedules. Often the wrong product results in unnecessary inventory increases handling/storage costs and hampers product delivery. 

With supply chain management, products are produced based on customer requirements. So, the goods produced must be flexible with market changes. For that, it requires the ability to change rapidly to adapt to variations in mass needs. 

To achieve on-time production processes with minimum lot sizes, managers must focus on low setup/change costs including reengineering of processes, changes in product design, and attention to the product range.

Procurement

Building long-term relationships with a group of suppliers in the sense that a win-win relationship will change the traditional buying system. This relationship involves the supplier from the product design stage to reduce the product development cycle and improve coordination between engineering, purchasing, and suppliers at the final design stage. To speed up data transfer and communication, purchases can be made using the EDI facility.

Product Development and Commercialization

To reduce the time a product enters the market, customers and suppliers should be included in the product development process. If the product cycle is short, the right product must be developed and launched in a short and precise time so that the company is strong in the competition. The product development and commercialization manager should:

1) coordinate with the CRM to identify customer needs that have been accommodated and which have not been accommodated;

2) selecting the appropriate materials and suppliers related to the procurement department;

3) develop production technology and production flow to access production capabilities and integration into the supply chain flow that is best for product/market integration.

Returns

An effective returns management process allows us to identify productivity opportunities to improve and breakthrough projects to compete. Returns at Xerox include equipment, components, suppliers, and competitive trade-ins. The availability of returns (return to available) is a measurement of the cycle time needed to achieve a return on assets in the status used. 

This measurement is important for customers who need a replacement product at short notice in the event of a product failure. Also, equipment used for scrap and waste from the production department is measured at the time the organization receives cash.

I hope this article will be useful to you.

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