The process of purchasing, transporting, manufacturing, distributing and finally delivering raw materials and parts to customers is regarded as an interlocking chain, which is the supply chain.
The supply chain concept is derived from the incremental manufacturing concept of expanding and delaying a business' production operations. For example, in the lean collaboration mode of Toyota, suppliers’ activities are controlled and coordinated as an organic part of production activities. This is going forward.
Postponement refers to the extension of production activities into the sales and service stages of products. Therefore, the supply chain is a kind of Interface formed between customers and suppliers through such activities as Plan, Obtain, Store, istribute, Serve, etc., so that enterprises can meet the needs of internal and external customers. The supply chain is related to and different from the concept of distribution channel in marketing.
The supply chain service includes all companies and enterprises involved in the supply, production, distribution and sale of products before they reach customers, so its definition covers the concept of sales channels. The supply chain pays equal attention to upstream suppliers (supply activities), intermediate producers (manufacturing activities) and shippers (storage and transportation activities), and downstream consumers (distribution activities).
Therefore, supply chain management refers to various activities and processes that plan, coordinate, operate, control and optimize the whole supply chain logistic. Its objective is to provide the Right Product required by customers at the Right Time, according to the Right Quantity, Right Quality and Right state Status) to the Right place (Right Plac E), which is “6R” — with minimal total cost.
The ultimate goal of a supply chain is to meet customer needs while realizing its own profits. It includes all the links related to meeting customer needs, not only producers and suppliers, but also transportation, warehousing, retail and the customers themselves. Customer demand is the driving factor of the supply chain, and a supply chain starts from customer demand and gradually extends upwards.
For example, when a customer walks into An Amazon store to buy shampoo, the supply chain service begins with that customer's demand for shampoo, and the next stage of the supply chain is Amazon, the shipper, the distributor, and the P&G production plant. A supply chain is dynamic and includes the flow of products, information, and capital that flows between stages. Each stage performs a different process and interacts with other stages. Amazon provides product and price information to customers, customers pay for products, Amazon then sells point information and replenishment information to the distribution center, the distribution center replenishes Walmart, and the distributor also provides price information and replenishment arrival date to Amazon. The same information, materials, and capital flows occur throughout the supply chain process.
Supply chain management includes five basic contents: planning, procurement, manufacturing, distribution, and returns.
Planning: This is the strategic part of SCM. You need to have a strategy to manage all the resources to meet the needs of your customers for your product. A good plan is to establish a series of ways to monitor the supply chain so that it can deliver high-quality and high-value products or services to customers efficiently and cost-effectively and cost-effectively.
Procurement: Select suppliers who can provide goods and services for your products and services, establish a set of pricing, distribution and payment processes with suppliers and create methods to monitor and improve management, and combine the management processes for goods and services provided by suppliers, including picking up goods, verifying bills, forwarding goods to your manufacturing department and approving payments to suppliers.
Manufacturing: Scheduling the activities required for production, testing, packing, and preparing for delivery is the most measured part of the supply chain, including measurements of quality levels, product yields, and worker productivity.
Distribution: Many "insiders" call it "supply chain logistics", which is to adjust the user's order receipt, establish a warehouse network, send delivery personnel to pick up and deliver goods to customers, establish a product pricing system, and receive payment.
Returns: This is the problem-handling part of the supply chain. Establish a network to receive rejected and surplus products returned by customers and provide support in the event of problems with customer application products.
①The ultimate purpose of supply chain optimization is to meet customer needs, reduce costs and achieve profits, which are specifically manifested as:
(1) Improve customer satisfaction. This is the ultimate goal of supply chain management and optimization, all ways and methods of supply chain management and optimization, are working towards this goal, and this goal is also the foundation on which enterprises live.
(2) Improve the level of enterprise management. The important content of supply chain management and optimization is the reengineering and design of the process, which has an indispensable role in improving the management level and management process of the enterprise, and at the same time, with the promotion and implementation and application of the enterprise supply chain process, the systematization and standardization of enterprise management will be greatly improved, which will help to improve the level of enterprise management.
(3) Save transaction costs. The integration of the supply chain combined with e-commerce will greatly reduce the transaction costs of all links in the supply chain and shorten the transaction time.
(4) Reduce the inventory level: By expanding the boundaries of the organization, suppliers can grasp the inventory information at any time, organize production, and replenish in time. Consequently, businesses no longer need to maintain high inventory levels.
(5) Reduce procurement costs and promote supplier management. Since suppliers can easily obtain inventory and procurement information, personnel used in procurement management can be freed from this low-value labor and engaged in higher-value work.
(6) Minimize turnaround time. By automating the supply chain, predictability is greatly improved, allowing companies to not only produce what they need, but also reduce production time and increase customer satisfaction.
(7) Revenue and profit increase. By extending organizational boundaries, businesses are able to fulfill their contracts, increase revenue, and maintain and increase market share.
(8) Expansion of the network. The supply chain itself represents the network, and a company has established its own supply chain system and has already established a business network.
②Through supply chain management and optimization, enterprises can achieve the following multi-faceted benefits:
(1) Total supply chain management costs (as a percentage of revenue) reduced by more than 10%;
(2) The delivery timeliness of medium-sized enterprises increased by 15%;
(3) The order satisfaction lead time is shortened by 25% to 35%;
(4) The value-added productivity of medium-sized enterprises increased by more than 10%;
(5) The asset operating performance of the high-performing enterprise is increased by 15% to 20%;
(6) The inventory of medium-sized enterprises is reduced by 3%, and the inventory of high-performing enterprises is reduced by 15%;
(7) High-performing enterprises maintain the advantage of 40 to 65 days in the cash flow turnover cycle over ordinary enterprises.
(The above data comes from the yibo logistics consulting database.)
Behind the current fierce price competition in the homogeneous market is actually the competition in the supply chain. In a McKinsey survey, 68% of global executives surveyed believe that supply chain risks will increase further over the next 5 years. The competition of modern enterprises is no longer simply the competition of products and services, but the competition of business models, and the supply chain is the chain that connects the entire business model.
In the process of building the supply chain, enterprises should consider whether their customer segmentation is niche or mass market, and whether its vitality is short-lived or long-lasting; Whether the value proposition is a deep-seated implicit or explicit demand, whether it is a current demand or a future demand, and why the customer chooses; What core resources and key processes do these value propositions need to be supported, through what channels and customers to contact and establish what kind of customer relationships, and then consider how to obtain revenue sources from customer segmentation, and finally reverse from the revenue sources to build the most suitable supply chain, so that products can reach customers at a reasonable cost.
At the same time, from a higher point of view, there are no enterprises in the market, only the supply chain, and the enterprise itself is only one of the links, so the success or failure of the supply chain determines the success or failure of all enterprises in the supply chain to a certain extent. It can be said that the supply chain is an ecosystem, enterprises at the beginning of the supply chain operation should establish the main axis, such as spider weaving webs, from the inside out of the production, operation, management, marketing, access and other elements gradually pull the line connection, each circle line and the main line, auxiliary line to produce intersection, this intersection, is the common point of interests of all enterprises in the supply chain, the formation of a clear positioning, division of labor meticulous mechanism, profit is not just around the corner, but within reach.
Finally, consider whether a lack of investment in strategic areas is holding back business growth. If so, financing the supply chain logistics and the freight forwarding process could be a reasonable alternative strategy.
Whether you're running a fast-growing business or being the CFO of a large enterprise, it's critical to find ways to keep a tailwind.
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