#87 Benefits of Supply Chain Management

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[LAST UPDATED]:17th January, 2016
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Benefits of Supply Chain Management

Benefits of Supply Chain Management. Supply is one field that will open your eyes to the world. It shows you how vast the world is. 
I’m talking about a group of intellectual people. It’s one of those jobs that you didn’t really know existed. You see, Supply is arguably one of the most important aspects and most talked about professions in the world of business.
In many ways, Supply is where we store our goods, just until we can find a potential buyer; and than we get the product off our shelf, and to the customer.
It’s actually not a bad gig if you think about it. The world needs someone to issue supplies . Basically, Everyone needs supply.
  1. Competitively producing and distributing these products is a great challenge
“Being successful in the logistics business requires amazing attention to the details of how things are done. This information is used to shape new procedures. No matter what your major is in business, understanding operations and supply chain management is critical to your success. ” (P16-P17)
I have always enjoyed being in the supply field. Besides, pretty much most of my life  consisted of ordering skateboards through phone catalogs.
I always loved the fact that I could simply order something from my house and have it delivered in a couple weeks or so to my house.
This concept was powerful to me at the time and still is to me today.
You already know this, but I’m very passioniate about finance! This is because all supply concepts are directly applicable to me.
What is operations and supply chain management?
It is the design, operation, and improvement of the systems that create and deliver the firm’s primary products and services.
In other words, OSCM is starting from the
  1. manufacturer to the warehouse
  2. and then from there… to the retail store
  3. …and then from there… to the customer.
This is important to understand.
“Think of the supply network as a pipeline through which material and information flow.”(P18)
What is the difference between operations and supply chain processes
  • Operations – refers to manufacturing and service processes that are used to transform the resources employed by a firm into products desired by customers.
  • Supply Chain Processes – refers to processes that move information and material to and from the manufacturing and service processes of the firm.
These two definitions may appear to be a bit confusing. For our sake, let us try to simplify their intented meanings.
  • Operations refers to the ongoing improvements (ex: Ensuring Quality) required to manage a business. (Still a bit confusing. I know. Sorry)
  • Supply Chain Processes – refers to the methods involved in transporting (physically moving product) the manufactured product, and finally the delivery (warehouse) to the customer (Think about Walgreens stores).
another way of looking at this:
“Things are made using operations processes, and things are moved and stored using supply chain processes.” (P18)
There are enormous Benefits of Supply Chain Management. Part ofunderstanding this material is seeing how the concepts can be directly applied to business processes. Application refers to how the problem relates to the real world.
Internet technology has made the sharing of reliable real-time information inexpensive.” (P20)
In my opinion, This quote basically means that the landscape in which we exchange information has changed.
The price to own this info, well,  is now more affordable  than ever; and to the masses too! Lastly, anyone can access the Internet.
Each type of Process and the work involved:
  1. Planning – A firm must determine how anticipated demand will be met with available resources.
  2. Sourcing – involves the selection of suppliers that will deliver the goods and services needed to create the firm’s product.
  3. Making – where the product is produced or put together. 
  4. Delivering – also referred to as logistics processesCarriers are picked to move products to warehouses and customers.
  5. Returning – process involves receiving defective products. These would be Follow-up activities for after-sales support.
The differences between goods and services should be clearly distinguished here:
  1. In my opinion, I would much rather sell physical goods online than an intangible service any day of the week. 
    1. Services on the Internet such as Youtube.comand Udemy.com make it easy to upload your own videos.
  2. Whenever I think services, I always think about my father who is an accountant.
    1. Accountants have a clear service being provided.   
      1. Example: The client gives my dad, the accountant, their financial information,
      2. For compensation, my dad, the accountant, will prepare and file their tax returns.
  3. Whenever I think of productsI think of nuts and bolts being shipped from a manufacturer to a retail store to sell to customers. 
  4. Both goods and services have been around for a very long time. 
As A Side Note: If you ever need an honest accountant to prepare your taxes every year. My father, Tim Schultz [CPA],  is very talented professional. Click here to view his website.
Benefits of Supply Chain Management
What is Product-Service Bundling?
  • refers to a company building service activities into its product offerings for its customers.
“A recent study found that while firms that offer product-service bundles generate higher revenues, they tend to generate lower profits as a percent of revenues when compared to focused firms.” (P 23)
The Benefits of Supply Chain Management are:
  • “OSCM jobs focus on delivering the goods on-time and at low cost.” (P23)
  • “OSCM jobs are hands-on, people-oriented jobs.” (P23)
  • The chief operating officer (COO) works with the CEO to determine the company’s competitive strategy.
OSCM {Operations and Supply Chain Managementcareer opportunities are plentiful today because companies are always trying to improve:
  1. profitability
  2. quality
  3. productivity
  4. and reducing costs.
Lean Manufacturing, JIT, and TQC
I know when I was in the military, we heard a lot about the word “lean”. It sort of mean’t that we need to watch what we’re doing at work because our process are getting off course.
Total quality control – “which aggressively seeks to eliminate causes of production defects“.(P25)
Just-in-time production – “was the major breakthrough in manufacturingphilosophy. It is an integrated set of activities designed to achieve high-volume production using minimal inventories of parts that arrive at the workstationexactly when they are needed.” (P25)

Benefits of Supply Chain Management

Lean Manufacturing – is important because manufacturing can be costly. It helps to know how your company can reduce it’s costs, and still produce high volumes.
Manufacturing comprises of:
  •  processes
  • assembly lines
  • equipment
  • people
  • warehouse or factories
Okay, so; In 1913, Henry Ford developed an assembly line to make the Model-T automobile.
“The desire to keep workers and machines busy with materials flowing constantly made scheduling critical.” (P26)
In order to do their jobs’ effectively, the assembly line workers would need to possess a vast amount of knowledge.
High-Volume Standardized Services
What are they? and…How do we deliver high-volume standardized services?
  • The need to be lean and to remain competitive 
  • Eliminating non-value-added steps
  • Computerizing steps to achieve a desired outcome
  • Wasted effort from manual labor

Benefits of Supply Chain Management

Six Sigma Quality (Corporations & Government)
Green and Black Belt Programs
Originated in the 1980s: Total Quality Management.
  1. Supply chain management is for managers who want to apply a total approach to managing the flow of:
    1. info:
      1. Example – schedules or plans
    2. materials:
      1. Example – consumables and repairables
    3. services:
      1. Example – when you take your car to see a mechanic
Mass Customization – is producing a product exactly to a customer’s tastes.
Business Analytics – is using business data to solve business problems.
For companies, It’s all about trying to maximize profit!
If a company wishes to be competitive, it may want to consider understanding and implementing operational supply chain management. Supply has a lot to do with strategy and process.

Benefits of Supply Chain Management

It is essential to work at companies that offer employee developmental opportunitiesThis could be specific training in which employees get to know who they’re working with on a regular basis by participating in fun, group activities.

The Definition of Viability 

  1. ability to live, especially under certain conditions
  2. the capacity to operate or be sustained
The Receivable Turnover Formula
= annual credit sales/average accounts receivable
Here are some things to consider:
  • speed of delivery of products
  • accuracy in filling orders
  • amount of inspection the customer needs to do
It’s vitally important that companies learn to control their “speed of inventory” usage. In other words, the inventory turnover ratio can be used to measure a company’s efficiency.
What would you do if I told you that prices where going to be on the rise in the next year? Meaning: the price of bottled water was going to be $10 per bottle of water. What would you do? I think most people would freak! The point is that you should plan your portfolio for events such as rises in price. 

How can you achieve this?

  1. make certain you are creating passive income for yourself
  2. budget your food money to meet the rise in food and water price
  3. start maybe-thinking of reducing your monthly expenses
  4. build up your inventory in case of a material shortage
OSCM jobs require working with others and figuring out the best way to do things.” (P33)

Popular concepts developed since the 1980s.

  • Just-In-Time Production
  • Total Quality Management
  • Six Sigma Quality
  • Business Process Reengineering
  • Supply Chain Management
  • Electronic Commerce
benefits of supply chain management

Benefits of Supply Chain Management

The world is full of businesses opportunities. Due to the creation of programs such as Six Sigma, we can now see that Supply Chain Management is a field that is forever changing its practices and procedures. 
In order to increase their profits, Companies are always trying to reduce to their operating costs.
Thank you for your time and interest in reading this post. I’m thrilled that you are as passioniate about supply chain management as I am. Please look around the rest of the site for other related articles.
Sources Cited:
Dr. Joel Wisner,
SCM 352 {Operations and Supply Chain Management}
McGraw Hill Education
ISBN-10: 1308367805

Benefits of Supply Chain Management

Respectfully Written By:
Carl Wolfgang Schultz


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