Supply Chain Management: Process & Examples

Instructor: Shawn Ferguson

Shawn is a recent graduate from Walsh College's MBA program in Michigan. He is currently an instructor at his current company and previously was a substitute teacher.

In this lesson we will be discussing the value and necessity of supply chain management. Supply Chain Management is the strategy of ensuring that raw materials, goods and inputs are in the correct place at the required time. While this is a very basic idea, imagine all the small parts a vehicle manufacturer has to keep track of. Not an easy task.

The Supply Chain

The Supply Chain is the movement of raw materials, goods and products from one place to another. This could involve a single company or multiple companies at once. A supply chain example could be the objective of moving steel using a railroad from the manufacturer or steel to an automobile producer. Another example could be the completed vehicle to the dealership.

Supply Chain Management

Supply Chain Management is the oversight of each step in the supply chain process. SCM includes managing problems, purchases, transportation, inventory and every other aspect of moving one item from one place to another. Without paying attention to each step of the supply chain and managing correctly, manufacturers will either have too much or too little raw materials to produce and market their products. Typical examples of supply chain management were people placing orders for raw materials, keeping track of their estimated time of arrival and then physically assuring their delivery and specifications. All of these activities would be done manually and would take an enormous amount of time to complete. The early days of automobile manufacturing just keeping track of raw material inventory levels using on pen and paper was a massive undertaking.

Moving Towards Technology

Supply chain management has seen vast improvement due in large part to advances in technology. Inventory control is a paramount part of the supply chain for both a manufacturer and customer. Nothing is worse for a client to hear that something was out of stock when the manufacturer said they had plenty of an item in stock. Advancements using laser scanners, bar code readers, and new RFID tags (radio frequency ID) allow inventory control to move from hand counting components and products to quickly scanning an area. People are still needed to run the laser and barcode scanners, but commands operate RFID tags. RFID tags attached to a component and an individual may 'ping' every RFID tag to understand what is still in the warehouse, manufacturing line or shipping area.

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