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Material Flow
Material flow includes a smooth flow of an item from the producer to the
consumer. This is possible through various warehouses among
distributors, dealers and retailers.
The main challenge we face is in ensuring that the material flows as
inventory quickly without any stoppage through different points in the
chain. The quicker it moves, the better it is for the enterprise, as it
minimizes the cash cycle.
The item can also flow from the consumer to the producer for any kind of
repairs, or exchange for an end of life material. Finally, completed goods
flow from customers to their consumers through different agencies. A
process known as 3PL is in place in this scenario. There is also an internal
flow within the customer company.
Information Flow
Information/data flow comprises the request for quotation, purchase
order, monthly schedules, engineering change requests, quality
complaints and reports on supplier performance from customer side to
the supplier.
From the producer’s side to the consumer’s side, the information flow
consists of the presentation of the company, offer, confirmation of
purchase order, reports on action taken on deviation, dispatch details,
report on inventory, invoices, etc.
For a successful supply chain, regular interaction is necessary between
the producer and the consumer. In many instances, we can see that
other partners like distributors, dealers, retailers, logistic service
providers participate in the information network.
In addition to this, several departments at the producer and consumer
side are also a part of the information loop. Here we need to note that
the internal information flow with the customer for in-house manufacture
is different.
Money Flow
On the basis of the invoice raised by the producer, the clients examine
the order for correctness. If the claims are correct, money flows from the
clients to the respective producer. Flow of money is also observed from
the producer side to the clients in the form of debit notes.
In short, to achieve an efficient and effective supply chain, it is essential
to manage all three flows properly with minimal efforts. It is a difficult
task for a supply chain manager to identify which information is critical
for decision-making. Therefore, he or she would prefer to have the
visibility of all flows on the click of a button.
7. Achieving maximum efficiency in using labour, capital & plant through the
company.
Cycle view
The processes in a supply chain are divided into a series of cycles, each performed at
the interface between two successive stages of a supply chain.
All supply chain processes can be broken down into the following four process
cycles:
Dell, in contrast, sells directly to customers, thus bypassing the retailer and distributor.
A cycle view of a supply chain is very useful when considering operational decisions
because it clearly specifies the rules and responsibilities of each member of the
supply chain. The detailed process description of a supply chain in the cycle view
forces a supply chain designer to consider the infrastructure required to support
these processes.
The cycle view of a supply chain is useful, for example, when setting up information
systems to support supply chain operations, as process ownership and objectives are
clearly defined.
Replenishment cycle
The replenishment cycle occurs at the retailer/distributor interface and includes all
processes involved in replenishing retailer inventory. It is initiated when a retailer
places an order to replenish inventories to meet future demand.
The replenishment cycle is similar to the customer order cycle except that the retailer
is now the customer. The objective of the replenishment cycle is to replenish
inventories at the retailer at minimum cost while providing high product availability.
Manufacturing cycle
The manufacturing cycle typically occurs at the distributor/manufacturer (or
retailer/manufacturer) interface and includes all processes involved in replenishing
distributor (or retailer) inventory.
Procurement cycle
The procurement cycle occurs at the manufacturer/supplier interface
and includes all processes necessary to ensure that materials are
available for manufacturing to occur according to schedule.
Push Supply Chain – Under push supply chain, the logistics are
driven by long-term projections of customer demand. For example, at the
end of the summer season, clothing brands start to manufacture more
warm clothes. This type of planning becomes valuable to companies as it
helps plan them for events in the future and be prepared when winter
comes. This gives the companies meet their needs in time and also gives
them time to figure out other logistics like where to store the inventory.
Customer Relationship Management (CRM) embodies those processes that take place
between an enterprise and its customers downstream in the supply chain. The goal of the
CRM macro process is to generate customer demand and facilitate the transmission and
tracking of orders.
Marketing: Marketing processes center on such issues as which customers to target, how to
target them, what products to offer, how to price products, and then 7 how to manage the
actual campaigns targeting customers.
Sell: The sell process focuses on making an actual sale to a customer. It includes providing
the sales force with the information needed to make the sale and then executing the actual
sale.
Order Management: The process of managing customer orders as they flow through an
enterprise is important both for the customer to track an order and for the enterprise to
plan and execute order fulfillment.
Call/Service center: A call/service center is often the primary point of contact between a
company and its customers. The center helps customers place orders, suggests products,
solves problems, and provides information on order status.
Supply chain management, according to the definition set forth earlier, is focused on
operations internal to the enterprise and includes all processes involved in planning for and
fulfilling a customer order. The specific SCM processes are as follows:
Strategic Planning: The goal of this process is to plan resource availability across the supply
chain network. Strategic planning decision focus on where to locate plants and warehouses,
what type of facilities to build, and what markets to serve from each facility.
Demand Planning: This set of processes helps users forecast customer demand and make
demand-management decisions on such critical activities as promotion planning.
Supply Planning: This is the real heart of SCM--and in many respects, it is the heart of
extended supply chain management. The supply planning process takes as input the
demand forecasts generated by demand planning and the resources made available by
strategic planning.
Field service: After the product has been delivered to the customer, it eventually must be
serviced. Service processes focus on setting inventory levels for spare parts as well as
scheduling service calls.
SRM includes those processes focused on the interaction between the enterprise and
suppliers that are upstream in the supply chain. There is a natural fit between SRM and SCM
macro processes, as supplier constraints are a critical component of SCM planning. The
major SRM processes include:
Design Collaboration: The goal of this process is to jointly design (with suppliers) products
that have positive supply chain characteristics such as ease of manufacturability and
commonality across several end products. Examples of design collaboration include the
sharing of engineering change orders between a manufacturer and its suppliers and the
creation of bill of material cross-reference databases.
Source: The source process qualifies suppliers and helps in supplier selection, contract
management, and supplier evaluation. By carefully analyzing how much it spends with its
different suppliers, companies can often find significant improvement opportunities.
Buy: The buy process executes the actual procurement of material from suppliers, and
includes the creation, management, and approval of purchase orders. Buy software
automates the procurement process and helps decrease processing cost and time.
Negotiate: Negotiations with suppliers involve many steps, starting with a request for quote
(RFQ). The negotiate process also may include the design and execution of auctions.