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Supply Chain Management Archives - Page 4 of 5 - MBA Knowledge Base

Inventory Management Concepts in Supply Chain Management

Inventory management aims to handle all function correctly with tracking and management of material. Inventory management is very wide definition like to replenishment lead time, carrying costs of inventory, asset management, forecasting, valuation, visibility, future inventory cost, space, quality etc. The ultimate aim of supply chain management is how well you manage your inventory. Manufacturers face a number of challenges which require not just exceptional planning but also an effective communication setup that keeps you updated at the spur of a moment. From rapid changes of customer demands, globalization or even natural calamities can cause your inventory to be stuck up paving way for no wages to the employees.… Read the rest

Integrating Material and Financial Flows in a Supply Chain

Firms in the past have mainly focused on improving the material flow in a supply chain using various innovative methods like cross docking, Vendor Managed Inventory (VMI), Collaborative Planning, Forecasting and Replenishment (CPFR) etc. Firms have also used IT solutions to automate the material flow. Today, they have also begun to focus on improving the financial flow in the supply chain. Many firms have adopted best practices of cash flow management to improve the financial flow. One of the key elements which helps in efficient financial flow in a supply chain is the use of IT solutions in the purchase-to-pay and order-to-cash processes.… Read the rest

Order-to-Cash Process

Order-to-cash process consists of financial transactions with the customers in a supply chain. Order-to-cash process starts with the customer placing the order and ends with receiving the payment from the customer. The steps involved in the order-to-cash process are explained below.

The order is placed by the customer directly through phone, fax, or the internet. Then, the inventory is checked for the availability of the product in the quantity required by the customer. The firm then checks the customer credit status to decide whether or not to extend credit to the customer. For this, the customer’s credit limit and the status of receivables from the customer are checked.… Read the rest

Purchase-to-Pay Process (PTP)

Purchase-to-pay process consists of financial transactions with the suppliers in a supply chain. Purchase-to-pay process starts with the buyer making the requisition and ends with the payment to the supplier. The buyer makes a purchase requisition and it is passed on to the purchasing department for approval. After getting the approval of the purchasing manager, a purchase order is sent to the supplier. On receiving the purchase order the supplier dispatches the shipment along with the invoice. On receiving the goods, the firm checks the shipment and the invoice to confirm whether the shipment matches the purchase order and the product quality/quantity is as desired.… Read the rest

Components of Supply Chain

A supply chain is a network of manufacturers, suppliers, distributors, transporters, storage facilities and retailers that perform functions like procurement and acquisition of material, processing and transformation of the material into intermediate and finished tangible goods, and finally, the physical distribution of the finished goods to intermediate or final customers.

Major Components of Supply Chain

A supply chain may consist of variety of components depending on the business model selected by a firm. A typical supply chain consists of the following components:

  1. Customers: The customer forms the focus of any supply chain. A customer activates the processes in a supply chain by placing an order with the retailer.
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Supply Chain Management Processes

Although there are many views of supply chain management (SCM), at present, many practitioners look upon SCM as the management of key business processes across the network of organizations that form the supply chain. A supply chain is a network of manufacturers, suppliers, distributors, transporters, storage facilities and retailers that perform functions like procurement and acquisition of material, processing and transformation of the material into intermediate and finished tangible goods, and finally, the physical distribution of the finished goods to intermediate or final customers.

According to the definition given by the Global Supply Chain Forum, supply chain management is the integration of key business processes from end-user,to original suppliers that provides products, services, and information that add value for customers and other stakeholders.… Read the rest