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Supply Chain Management


A supply chain is defined as the set of processes and resources that produces and delivers finished goods from raw materials and capital resources, it is also referred to the value stream . The term supply chain can also be used interchangeably with the logistics operations of some businesses, but in reality the supply chain is greater than just logistics.Lean manufacturing principals may be used in a kaizen program to improve and optimize supply chain performance in many areas. A more detailed definition of a supply chain can be found here: supply chain definition.
Supply management is a broad subject and can be broken down into several areas. These can be defined as:

Supply Chain Strategy and design

A supply chain can both be internal or external to the organization. Supply chain designs can also vary in complexity and may have many stakeholders. It is important to understand the product and marketplace, stakeholders' needs and understand the potential bottlenecks to be able to both manage and improve customer service, reduce lead times & inventory levels through the right supply chain design and capacity strategy. These objectives can also be achieved through product design,lean, balanced production lines, flexible production capacity, kanban systems and distribution operations, as can be seen in mass customized products as an example.

The following supply chain strategies are the most common in most organizations and businesses:

-Lean Just in time supply chain

-Flexible supply chain

-Risk adverse supply chain

Inventory management

Inventory is one of the biggest categories of assets on a company balance sheet, if not managed properly it can be a drain on cash flow and cost the business a lot of money in inventory costs, spoilage, and waste of valuable resources . On the other hand if a business is able to manage its inventory efficiently and coordinate its demand, stock rotation, production and inventory levels together great cost savings can be realized and even provide a substantial competitive advantage over competitors.Modern inventory management is carried out through software packages.

For more on Inventory management: Inventory management and control

Demand Management and Forecasting

The ability to forecast demand can vary greatly between industries and depends on many individual factors of each business. There are different methods used to forecast demand. These can include regression and time series analysis. Understanding demand and the driving factors can help manage the supply chain efficiently and achieve cost savings in the proper use of resources, WIP and inventory levels with either a build to order or build to stock production and inventory system. Demand forecasting is an integral part of strategic planning.

The principals of lean manufacturing play an important part in Supply Chain management as they can be used to boost performance across the supply chain and also used to implement continuous improvement activities.



    More lean concepts and terms