Supply chain management is used in manufacturing to ensure the reliable supply of components and other services and requirements for the production of electronic or other equipment as well as the management of aspects such as cash-flow.
Effective supply chain management is now an integral part of a manufacturing process as it is necessary to ensure that costs are minimised and efficiency levels increased, and the whole manufacturing process is managed in an effective manner.
As a result of its importance, supply chain management is used by many companies in various forms and is a key element in the planning and implementation of manufacturing processes.
Supply chain management basics
It is becoming increasingly important for organisations to have effective supply chains. In order that a manufacturing organisation can run effectively, components, goods and services must be in place when they are required. They must also not be in place any sooner than necessary as this requires additional storage and payment must be made before the items are required. It must also be possible to resolve any problems swiftly and effectively.
Supply chain management encompasses many activities within an organisation. It requires the consideration of the planning and management of component and services sourcing, procurement, conversion, and logistics management.
Supply chain management also includes the building of relationships with partners with partners, which may include suppliers, intermediaries, third-party service providers, and customers.
Accordingly, supply chain management integrates supply and demand management within and across companies.
While some companies may choose to address all the issues of supply chain management within their own company, often many of the services are subcontracted out. One key example of this is the use of a distributor to control the component inventory. This can work well because the distributors have a large buying potential and already have relationships with a large number of component suppliers. As such they are able to easily add the supply management of many of the components to their existing workflow.
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