The elements of a supply chain
If you are the owner of a manufacturing company one of the most important parts of your production process is the supply chain. It is important to keep in mind that some supply chains will be fairly simple while others will be complex. The size of the business, the intricacy of what is produced, the amount of production, and the type of business will all be determining factors as to how complicated the supply chain ends up being. However, there are basics parts of any supply chain. Here is what you need to know about the elements of a supply chain-
- Customer-It is important to note that it is the customer who starts and ends the supply chain. The process of the supply chain begins when a customer places an order with a manufacturer. The sales department will process the order for a specific amount of product that is to be delivered on a certain date. The sales order will also detail any requirements that should be adhered to in the production process.
- Planning-This part of the supply chain begins when the order the customer has placed is then combined with other orders. The production planner will have to design a production plan that can make sure that all orders are filled to the customers satisfaction. In addition, the planning department will have to determine how much of the raw material will be needed in order to produce the finished product.
- Purchasing-After the planning has been put into place the personnel that are in the purchasing department will receive the plan and review it to determine what raw materials and other services will be needed. Suppliers will then be sent purchase orders that will order the needed amount of raw materials to be delivered to the manufacturing company by a certain date. If there are additional services needed they will be ordered at this time.
- Inventory-The inventory management of the supply chain is a crucial part of the process. When the raw materials are sent in by the vendors, all orders will be checked to insure that they are correct and the raw material is of the highest quality. They will be then moved into a waiting area to await production. The vendor will then bill the manufacturing company for the items that they have delivered. The production company is then notified that their needed raw material is available.
- Production-This is the time that production plan is put into motion. The actual production process begins here. The raw materials will be moved to the production line. The production process begins and turns the raw materials into the finished goods that have been ordered by the customer. Once the items have been produced they are then moved back to the warehouse to prepare them for shipping to the customer.
- Shipping-This is the point when the finished product is taken from the warehouse and packed for shipping. The shipping department will decide what the best method for shipping the products is. They will want to insure that the order not only arrives safely but within the time frame that was specified by the customer. The manufacturing company will then bill for the order once it is received by the customer.
How well each component of the supply chain is managed will directly affect the final outcome of the production process. Successful manufacturing companies are highly adept at making sure that each part of the supply chain functions in the most cost and time efficient manner possible. When the supply chain is managed correctly manufacturing companies find that they can operate profitably for a long time.