Unit 26-L.O.1 Apply Key Supply Chain Concepts, Principles, And Processes In An Organizational Context.

Course: Pearson BTEC Levels 4 and 5 Higher Nationals in Business

Supply chain management is a detailed and complex process that begins with the procurement of raw materials all the way through to the delivery of finished products. This blog will explore the key supply chain concepts, principles, and processes in an organization. The first section will examine what supply chains are all about, how they work, and why businesses need to understand them. Then we’ll look at some specific examples of how supply chains can be used successfully in organizations today. Finally, I’ll talk about where you might find opportunities to apply these concepts as well as resources for finding out more information on this topic. Let’s get started!

The supply chain:

What is a supply chain?

Supply Chain is a system that brings together people and organizations involved in producing, supplying, or delivering goods and services.

The ultimate purpose of supply chains is to deliver a product from the raw materials stage all the way through to its final retail point.

Businesses buy and sell products based on demand.

For example, a grocery store might purchase metal cans, containers of tomatoes, and bags of potatoes from an agricultural production company.

A construction company might need nails and lumber to build an office building.

The retail firms could have invested in the machinery needed for the production process while machines may be involved in a large part of the production process for industries like steel refining or artificial intelligence development.

How supply chain concepts, principles & their process differ between the service and manufacturing sectors?

The service industry utilizes current lean principles to improve the value of its services, such as improving employee training, customer service, and facility maintenance.

The manufacturing industry utilizes current lean principles to improve the value of their product, such as undertaking just-in-time inventory practices or utilizing Kanban systems.

However, there are two key differences between the application of these principles in both industries:

1) The manufacturing sector’s goal is driven by creating and delivering products whereas the services sector’s goal is driven by fulfilling customers’ needs;

2) Manufacturing firms keep inventories for constant production whereas services firms fulfill customers with one-time orders.

For example, a highly specialized software company will create and deliver software solutions on an as-needed basis depending on the customer’s requirements.

What is supply chain management?

Supply chain management begins where the primary production ends. The modern computer and internet technology have made it possible for producers with different constraints to quickly transmit information to each other, so the supply chain can include producers in one or more countries.

Supply chain management is conducted at the top level by a company’s senior managers, whereas those lower in the company deal with day-to-day logistics and are usually considered part of operations.

Most large companies use a supply-chain database system for dealing with inventory records, transportation needs, and related tasks; these enable managers to know what raw materials are needed on hand or how close they may be running out of supplies if sales continue at their current pace, etc.

Let’s use an example that’s often used to define supply chain management –

A car breaks down, so you need a new one. You have two choices: either buy another car from a dealer or send your old auto to the mechanic and have it fixed. In today’s economy, many consumers are choosing option two because they can save money on not purchasing another vehicle while their old vehicle is being repaired as if they were doing it themselves.

That model has been what people have called “self-service” for 30 years now, and in the past three decades, innovation has slowly started happening with businesses who realized this trend and attempted to introduce ways of making this process safer and more efficient by sharing information with customers over their websites before they even go to their business.

The key principles of supply chain management

The key principles of supply chain management include:-

1.inventory & production planning

2.procurement (including sourcing, vendor development, supplier selection – strategic and tactical)

3.demand management including sales & operations planning

4.customer service/distribution.

Using lean supply chain principles to enhance competitive advantage

Lean Supply Chain Principles have been shown to provide a competitive advantage in five ways –

1.Leading to lower lead-time and better customer service,

2.Reducing costs (through improved inventory management),

3.Improving product quality (by reducing or eliminating defects),

4.Improving resource utilization (and making the supply chain more sustainable or resilient) and lastly optimizing the order entry process.

5.using lean supply chain principles, an organization can improve its demand forecasting capability.

Resources:

Efficient and effective resource planning and management

Resource management is of the utmost importance to any successful organization.

Truly efficient product and process flow, customer service, inventory management, production efficiency, productivity, and delivery can be very challenging for companies.

resource planning and management should embark on an approach that aligns with their objectives to optimize resource allocation.

resource planning and management may be able to achieve this by modeling their company processes in a software simulation tool such as Simulate3D or one of its alternatives like Enterprise Architect or Microsoft Visio.

These tools help organizations understand what’s working well while highlighting where they need improvement and providing best practices suggestions for how to implement those changes successfully with minimal risk exposure so they won’t have another setback anytime soon.

Obtaining working capital and capital investment.

Supply chain companies need to not just make sure they have the right materials but also stay current on their ability to fund production.

Companies that fall behind in production are at risk of getting stuck in an unrelentingly bad cash flow position. For a company to maintain its cash flow position, it needs certain buffers with suppliers and customers so that any delays (or knock-on effects from other supply chain components) can be absorbed without throwing them into insolvency.

The first step is making sure your company has working capital available before taking payment from customers or ordering new inventory.

secondly, the issue of how you’re going to finance that working capital becomes critical and if necessary, when you approach it from this perspective then financing can sometimes be a positive thing because it gives you more options.

Production:

The relationship between demand planning and production scheduling.

Actually, the truth is production scheduling and demand planning are two completely different things.

Demand planning focuses on developing a forecast of what products will be needed to meet customer demand while ensuring inventory levels stay sufficient or normal.

On the other hand, production scheduling is simply the arranging of workflows to complete projects. With this said, many organizations use some form of demand forecast for setting up their production schedules because it allows them to plan ahead and not wait until very late before deciding how much material should go into certain jobs.

Incorporating project management techniques into the production process.

Manufacturing project management is usually broken down into eight steps for completion.

Begin by understanding the involved parties and then identifying the constraints, to clarify what comprises a successful product launch.

Next, create an activity list or schedule to map out how all of these tasks will be accomplished with necessary dependencies noted between activities and tasks.

Include what needs to be done physically, such as looking at timelines or determining work order priorities.

It’s also important to consider whether floor space is available for moving equipment in and out as needed for each stage of production, without interrupting other processes that are ongoing in the plant facility environment at the time.

A cost estimator should then be sourced who can incorporate all overhead expenditures related to workforce costs, capital equipment, and logistics into the cost estimate.

Manufacturing:

Selecting the most appropriate strategy

The widely-used Supply Chain Strategy Selection Framework breaks down as follows:

1. Determine the overall supply chain goal and its operational and strategic drivers

2. Create a strategy map including all relevant links in the supply chain (e.g., customer, suppliers, inventory)

3. Select a specific strategy that best meets the supply chain criteria based on the select inputs from step #1 and what you have learned after inputting your knowledge into steps #2-#4 of this process to get ready for building your plan with step 4

4. Build a plan with four major strategic tools:

A)Market analysis

B)sourcing alliance management

C) network design/production planning

D)operations performance monitoring strategies

Flow management as a concept and technique

The term “flow management” is used to describe the logical sequencing of business processes (or activities) and its objectives are to shorten lead times, optimize flow, minimize bottlenecks, and ultimately reduce the use of inventories with or without optimization.

As a technique within supply chain management, it has been recognized as a best practice that really pays off in terms of customer service.

So basically, flow management can be summarized as a methodical approach for controlling all changes that happen after an order is placed by a client until the goods have reached their destination at the hands of said or done so.

Selecting the most appropriate location for establishing a manufacturing operation, including consideration of transport links and costs.

Regardless of the type of operation, it is always preferable to source closer to the consumer. If possible, production should take place close to major cities and large ports.

For example, if you are manufacturing toys or other light items, it could be more cost-effective to produce them in China because of proximity; however, the customer may prefer to purchase from suppliers located nearer their home. Trucking costs for heavy goods such as machinery are considerably higher than shipping by sea containers which can require substantial volumes of the product ordered at once. Such products might be better manufactured locally or outside in much larger quantities.

Impacts and application of technology:

The use of real-time automated delivery notification systems for tracking and monitoring the delivery of products.

The use of a real-time automated, in-transit shipment notification system is paramount for any organization that aims to provide optimum customer satisfaction in the competitive business world. A key component that contributes to this is letting your customers know where their product is at all times during its journey towards them.

Notifications can be sent out when shipments depart from origination and when they arrive at their destination by connecting with in-transit tags that are connected to the web through tracking devices. This information facilitates feedback loops to assure that risks such as damaged packages or late delivery are identified early and managed efficiently so as not to jeopardize customer satisfaction levels for your brand or company’s reputation.

In addition, these systems’ produce seamless integrations into back-office systems such as ERP and WMS, helping organizations create higher levels of traceability above and beyond the requirements of the FDA Food Safety Modern.

The application of barcode scanning, digital cameras, and smartphones, etc. in warehouse operations

Managers can monitor worker productivity, analyze customer preferences, or track inventory.

Mobile barcode scanners and digital cameras are used more often for tracking inventory and customer preferences. Some of the most common uses for these technologies in warehouses are sorting of items to be shipped to customers and receipt scanning at entry points.

Labels on incoming products can be scanned, creating a digital signature for the item. This is an improvement over pen and paper systems, which do not allow multiple users to access data in real-time. It also reduces the need for scanning or labeling at receiving points because the information will never have to be manually entered into a system.

Scanning labels can also increase warehouse efficiency by shortening shipping times and reducing product loss due to mislabeling of shipments.

Computerized shipping, tracking, and invoicing for effective logistics and distribution.

Logistics plays an important role in effective logistics and distribution supply chains. This extends to information technology, specifically computerized shipping, tracking, and invoicing. These technologies provide efficiency through streamlining discrete tasks such as value-added processing, billing and payment processing, or even negotiating delivery options for improved customer satisfaction.

Software and cloud computing for real-time updates on production scheduling and inventory.

Software and cloud computing for real-time updates on production is the future of better and more efficient manufacturing.

Scheduling and inventory is the basis of what most software does, so SMART stands for Standardized Management And Retrieval Tool software – it’s an integrated system that provides you with all the tools necessary to achieve business strategies, such as accurate scheduling, instant alerts about inventory levels or shortages. The most common use cases are event management, supply chain optimization, and logistics management.

Scheduled tasks will be automatically executed by an agent regardless of operator oversight to ensure accurate performance; alert notifications can be used to warn operators of any discrepancies or problems with their devices that might have arisen during operation; work orders are stored in a database where they are organized by date and time so operators can easily tell which tasks have been completed and which still require attention.

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