Question

summary for better supply chain management

Answer 1

Defination - Supply chain management can be defined as the system, process, designing, plan, action, checking, monitoring and controlling the various activities like product manufacturing process right from procurement to manufacturing, conversion, sale and transfer to customer with the objective of creating value addition, increasing infrastructure levels, efficient inbound and outbound logistics thereby developing bridge in between supply and demand.

Some common techniques/ strategies which can be applied in day to day business process handling to improve supply chain management (SCM) are discussed below: -

1. INCREASING EFFICIENCY OF COMMUNICATION (INTERNAL AND EXTERNAL) – This act as a most crucial point in improving SCM efficiency as poor communication or miscommunication may lead to incorrect outbound deliveries or in bound procurement of goods/ services. Communication should be smooth, transparent, if possible – face to face in between internal department of an entity and also with its supplies, vendors, customers etc.

2. DEVELOPING LONG TERN RELATIONSHIPWITH SUPPLIERS : - A ling lasting relationship always tends to be prove beneficial for any business entity as in long term, both supplier and procurer tends to develop trust among themselves and deal in fair, transparent manner thereby developing synergy of operations.

3. PLAN, CHECK, MONITOR AND ACT: - Improving SCM is not one-time task but is a continuous cycle which requires adequate rationale plans for future course of action. Not only planning is enough, activities should be continuously checked to ensure whether they are going on as per plans or not. In case of any deviation, need to appropriately resolve the existing issue and ensure its non-recurrence.

Mentioned above were some broad strategies but let us now quickly discuss some business routine activities related improvement strategies: -

1. AUTOMATION IN PROCUREMENT: - Each manufacturing organisation should develop inventory storage level and develop procurement strategies considering inventory level, time in between ordering and delivering and develop a system whereby procurement order may be automatically passed system based on limit set by entity. Systems like Just in Time(JIT) may be implemented whereby raw materials will be procured only when there is actual requirement. JIT is a cost saver tool for improving SCM as it leads to reduction in inventory holding cost.

2. DEVELOPING STANDARD OPERATING PROCEDURE(SOP): - Entity needs to develop SOP for their routine working as these will guide labours/ supervisors performing their routine tasks. Also, these SOPs needs to be updated from time to time. It will lead to standardization of various activities and increase efficiency of SCM.

3. INVEBTORY TREND ANALYSIS ON REAL TIME BASIS: - Inventories level needs to be continuously monitored so as to develop ordering mechanism and also supply mechanism. Keeping an eye on inventory trend will help to identify slow moving inventory and fast-moving ones. Procurement and supply can be planned based on the inputs derived from inventory trend analysis.

4. CHECKING SUPPLIER QUALITY: Every organisation needs to regularly monitor its suppliers, vendors to ensure there isn’t any financial or supply quality issues. In case of any irregularities, quick action needs to be taken so that it does not hampers business operations.

5. SYSTEM BASED RECORDING INSTEAD OF MANUAL: - A system-based accounting for all transaction will be much cost saver and also increase efficiency of recording and reporting as it reduces chances of misstatement, error and frauds etc.

6. BOOSTING STAKEHOLDERS MORALE AND COMMUNICATION: - Entity must ensure to treat its employee and other stakeholders like supplier as a part of organization which will generate a feeling of ownership among themselves and lead to better results. Treating organization as their own will generate best results as they will take company as their own and try to serve in the best interest of organization.