Supply chain management is a common function in large organizations that deal with producing and delivering products. As complex as the job is, understanding it couldn’t be simpler.
Running a large business is not an easy job. Because of many moving parts, it can be difficult to keep track of what needs to be managed. Especially when it comes to manufacturing and delivering a product. To help make management simpler, modern organizations have broken down the process into stages under the umbrella of supply chain management.
The 5 stages of supply chain management
The five stages are in the following order and repeat in a continuous cycle:
Raw materials: The supply chain begins at the source of the product which is the raw material that makes up the ingredients. A business needs to locate where it will source its materials from based on price, quality, and convenience.
Supplier: Deals are made with suppliers to provide the materials and transport is arranged to move the material from the supplier to the manufacturing plant. Some products like processed milk require fresh produce daily and temperature-controlled transport that needs to be managed. While others like threads and fabric for clothing can be supplied once a week or month in ordinary vehicles with no special conditions.
Manufacturing: Large companies have dedicated manufacturing plants where the material is collected and processed to produce the final product. A home business might instead do manufacturing in their garage or basement. It all depends on the scale and size of the products.
Distribution: If the product needs to be moved in large amounts or to multiple locations, it might be stored in warehouses for distribution. Some businesses keep the warehouses within the manufacturing area while others like Walmart move them closer to customers for quick delivery times.
Customers: The final stage of the chain focuses on getting the product in the hand of the customer. Whether it is to a retail store or directly on the customer’s doorstep. It all depends on the industry and the preference of order of delivery by the customer.
The whole process from beginning to end is an entangled web of the process that moves in a linear direction. From manufacturing to distribution, all operations involved in the cycle falls under the responsibility of the supply chain manager.