An illustration of a supply chain.
Supply chain design generally boils down to three areas; receive raw material, manufacture a product, and transport the product. Each of these steps has several basic points that will improve a supply chain, regardless of the product that is made. The most important factor in an effective supply chain is proactive thinking. A company should never believe that the system currently in use is the best; There is always room for improvement. By constantly looking at your current supply chain design, you can make small improvements that add up to big savings.
A supply chain manager in a small organization may find suppliers and authorize purchase orders, as well as guarantee delivery.
One of the biggest improvements in modern supply chain design is computer-based operations. There are several different supply chain programs that will help companies create, maintain, and improve all aspects of the process. These programs often help a business find ways to improve or pinpoint problem areas that would have gone unnoticed without them.
At the raw materials stage, an effective supply chain design is based on time. It is very rare that a company wants a stock of raw materials that it is not using. In fact, most companies want as little surplus raw material as possible. Materials waiting to be processed may be damaged or destroyed, causing losses to the company. In most cases, the supply lead time should be set to receive more raw material before the current stock runs out.
The manufacturing phase is very different depending on the systems used and the goods produced. In general, this step is all about efficiency. Keeping workers operating at peak productivity will improve production for the next stage in the supply chain.
Keeping people productive is not always as simple as it seems. The greatest productivity factor is happiness. Often, if a worker feels that he has a vested interest in her work, beyond simply continuing to do it, his productivity increases. Whether this involves incentives like raises or personal involvement from their supervisors varies by worker and industry.
The final step in supply chain design is the one furthest from the company’s control. When selling a product to the next stage of the supply chain, it is important to understand who the product is being sold to. If the seller is a retailer, the business must look at how its product is displayed in the store. This may lead to improvements in packaging or merchandising. If the product is for other manufacturers, they may also have suggestions.
Additionally, companies should not rule out shipping or packaging practices. Low cost shipping is not always the best option. Usually getting products to a place when and how they are supposed to arrive is the best option. When packaging a product, companies must keep it to a minimum to reduce costs and protect the product from unintentional damage. In some cases, making a product more durable will result in happier customers and lower costs.