Flows in Supply Chain Management

There are various expressions to define supply chain management. The best one will be Supply Chain Management is a total systematic approach to manage flow of Information, material and money between Suppliers and Customers . Let us look at each of these flows in detail and also see how effectively used in companies.


Information Flow

Request for Quotation, Purchase order, Monthly schedules, Engineering Change Requests, Quality complaints, Reports on supplier performance flows from Customer side to Supplier.

From supplier side to Customer, it would be presentation of company, offer, confirmation of purchase order, reports on action taken on deviation, Dispatch details, Report on Inventory, Invoices etc.

If supply chain has to be successful, constant interaction has to happen between supplier and Customer. In many cases, other partners like distributors, dealers, retailers, logistic service providers are involved in the information network. Further to this, various departments at Supplier and Customers are in the Information loop. Internal information flow within the Customer for in-house manufacture is separate.

Material Flow

It moves typically from Supplier to Customer. It could be through various warehouses among distributors, dealers and retailers. Challenge here is to ensure that material flows quickly without halting as inventory in various points in the chain. Faster it moves, better it is for the company as it reduces cash cycle. For repairs, exchange, at end of life

material can also flow from Customer to Supplier. Finally, finished goods flow from Customer to their Customer through various agencies. 3PL in the process may be there in the picture. Not to forget here, internal flow within the Customer company.

Money flow

Based on invoice raised by supplier, Customer does verification for correctness. If that is correct, money will flow from Customer to Supplier. There could also be flow of money from Supplier to Customer as debit notes. For an efficient and effective supply chain, it is important that all three flows are managed properly with least efforts. For supply chain manager, it is tough task to decide which Information is important for the right decision and he or she would prefer to have visibility of all flows by click of a button. Chasing for Information e.g. level of Inventory ready for despatch is a non-value added activity. In this context, Purchasers will become some time chasers.

SMB context

Let us look at the above flow in supply chain management in typical small and medium size companies where they have more challenges. Lot companies still use manual purchase orders and sent to suppliers through courier or as scanned copy. Practice of PO acknowledgement is poor. Getting Visibility in supply chain is very difficult and for this suppliers are phoned repeatedly for Information. Excel sheets are pre-dominantly used for exchange of Information like level of inventories. EDI usage is not prevalent much. Companies doing export are still using on Excel sheets for various status like shipment details etc. The biggest challenge in all these is there is systematic analysis of past records which makes supplier performance evaluation very difficult. Also too many mail updates to buyers and suppliers will make the reader less sensitive to criticality. Companies using ERP, spends lot of time in invoice verification where Data is entered manually in system from physical invoices. Overall, lot of non-value added activities seen in managing flow in supply chain. There is a huge opportunity to streamline.

The solutions from www.tpsynergy.com will help supply chain partners to manage above flow seamlessly with least effort to make chain robust. Will support to eliminate non-value added activities.

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