Supply chain management in manufacturing companies
If you are the owner of a manufacturing company it is crucial to understand that how the supply chain within your business is managed will directly influence the long term success and even survival of your business. Supply chain management is crucial for manufacturers who must carefully consider every aspect of the products they product. Because of the importance of supply chain management many manufacturing companies have put a supply chain management process into place that will help them to operate their supply chain as efficiently as possible while still keeping their customers happy and production costs low. Business experts explain that there are 3 different levels within the process that many manufacturers will need to focus on. These levels of supply chain management are-
1. Strategic management-This is the highest level of the supply chain management process. At this point management within the manufacturing company will be looking to make the large scale decisions that affect the supply chain process. This can include but is not limited to: the location of the manufacturing company, the size of the company, what vendors and suppliers will be used, what products will be produced, and how will they be sold. This level of decision making will in essence lay the foundation of the supply chain and begin the first processes that will manage it.
2. Tactical management-This is the level of supply chain management that will focus the most on making decisions that will affect the cost of the production process. Management will at this level deal with any decision that affects cost and then work to reduce it as low as possible. This type of decision making can include but is not limited to: deciding what industry best practices to use, how purchasing will work, developing strategies for transportation and warehousing. The focus will be on working out logistics that will keep the cost of storing and moving inventory to a minimum.
3. Operational management-This part of the supply chain management process will focus on the actual production process. The decisions that are made at this point will determine how products are made and moved through the supply chain. This can include operational decisions such as: scheduling of the production process, any changes that are made to the production process, what purchasing agreements are made with vendors, order taking from customers, and moving products back and forth from warehousing.
Today, for most manufacturing companies' technology plays a big role in supply chain management. Manufacturing companies need to understand that this type of technology though expensive initially can save a company a significant amount of money over time. The bottom line is that with the complexity of the manufacturing process most companies cannot afford to not have the technology that helps them to manage their supply chain processes. Best of all, this type of technology can help a manufacturing company manage the entire supply chain process right from the purchase of the raw material to the moment that the finished goods get to the customer.
It should also be noted that this type of technology will not only require a cash outlay to get up and running but will need a commitment of time and other resources in order to be successful. Management will need to support the installation and continued use of supply chain management software in order for it to be successful. The key employees in the production process who will be managing the supply chain will also have to receive training on how to use the technology. However, with the proper training companies soon find that managing their supply chain processes with the use of technology is far more cost and time efficient.