Last updated on March 14th, 2023 at 08:15 am
A supply chain design refers to creating and managing a system of operations that delivers products or services to customers. It involves almost everything from the supplier to the end customer. Professionals who become supply chain analysts can improve efficiency, reduce costs and enhance customer satisfaction. That's why leading companies prefer professionals having supply chain management courses with analytics.
Suppose a coffee company designs its supply chain. It will start by sourcing high-quality coffee beans from farmers. The company works closely with its suppliers to ensure the beans are produced and stored sustainably. Once harvested, beans are transported for roasting to create the desired flavour profile. Beans are then packaged and distributed to coffee shops and retail partners.
Stages of a Supply Chain
Let's take another example of a clothing company to understand different stages.
Planning
The clothing company plans its supply chain by forecasting the demand and creating a production plan. This includes the quantity needed and the production schedule for each item.
Sourcing
The company then sources raw materials, such as fabric and thread, from suppliers. Moreover, it negotiates prices, establishes contracts and manages supplier relationships.
Production
The raw materials are then transformed into finished products in a production facility. It can be shirts, pants, jeans, or any other piece of clothing. This stage includes -
Managing the production process
Monitoring quality control
Ensuring that production schedules are met
Inventory management
Once produced, the inventory is stored and managed in the warehouse. This includes -
Monitoring inventory levels,
Tracking shipments and
Ensuring timely delivery
Transportation
The finished products are transported to stores using various transportation modes. This stage involves -
Managing logistics,
Identifying transportation modes and
Tracking shipments.
Retail
Once the products reach the stores, they are available for customers to buy. This stage includes -
Managing distribution channels,
Coordinating with retailers and
Ensuring timely delivery in a cost-effective manner
Thus, by managing each stage, the clothing company ensures high-quality products with cost and resource optimisation.
How Supply Chain Design Works
The working of supply chain design is quite simple. Here is how it works -
The first step is to define the objective of the supply chain design. It could be for cost optimisation, to improve customer service or to reduce lead times.
The next step is to collect data on the current supply chain. Data can be collected from suppliers, transport agents and inventory management teams.
Once the data is collected, it is analysed to identify potential areas for improvement.
Based on the analysis, an improved design is developed. The new supply chain design aligns with the objective.
The new model is then tested to see how it performs under different conditions. For instance, changes in demand or supply disruptions.
Once functional, it is then implemented. But it can include some modifications as well if needed.
The final step is to track the success of the new supply chain design. In case of deviations, adjustments are made to meet the objectives.
Suppose a consumer electronics company wants to optimise the cost. So, the company uses supply chain design to identify -
The ideal number of warehouses,
Location of warehouses,
Production facilities and
Transportation routes
The company will collect and analyse data based on the current supply chain design. Based on the analysis, a new design will be proposed and tested for different scenarios. Once the new design meets the expectation, it is implemented. Finally, the new supply chain design will be monitored to ensure it meets the cost optimisation objectives. But, in case of a discrepancy, it will be adjusted as per the goal.
Why should a company understand its supply chain?
Understanding the supply chain is important for a company for several reasons. These are -
It allows the company to identify areas where efficiency can be improved. This ultimately leads to saving costs.
The company can identify potential bottlenecks. It helps in planning steps to address them to ensure production runs smoothly.
It also helps the company to manage risk. The company can mitigate risks with supply disruptions or quality issues by knowing the supply chain.
It also helps the company to meet product demands more effectively. This eventually helps in -
Managing customer expectations,
Enhancing lead times and
Focusing on quality and price
Make your supply chain design and become a supply chain analyst
Whether you are just a graduate or a working professional, everyone can learn to create supply chain designs. From creating supply chain design to managing supply chain uncertainty, this Certified IIT Roorkee Supply Chain Analytics Course through Imarticus Learning, a learning platform for professionals, covers everything. Enrol today and become a supply chain analyst tomorrow.
