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Supply Chain Management Procedures
Supply Chain Management Procedures
Supply Chain Management Procedures:
Product Development-Commercialization Procedures
Manufacturing Flow Management Procedures
Procurement Management Procedures
Warehousing Management Procedures
Physical Distribution Procedures
Customer Service Management
Performance Management


Supply Chain Management (SCM) is an integrated business management approach inter-connecting components such as:

  • Business planning and organizing
  • Production management
  • Procurement management
  • Logistics management
  • Warehousing management
  • Customer service management 

The Objectives of the Supply Chain Management:

  • To achieve optimum utilization of resources primarily through business process integration under which interdependent and interrelated departments are linked. 
  • To attain sustainable growth and profitability by making strategic partnerships with suppliers, contractors, customer service specialists, product distributors, logistics providers, financial institutions. 
  • To manage business process integration to serve the business or vested interests of all stakeholders (stockholders, officers/managers, production engineers and workers, employees, suppliers-contractors, wholesalers-retailers, banking community, and finally customers).

Supply Chain Management Procedures:

Product Development-Commercialization Procedures

Generate ideas on new product to be developed by:

  • Conducting market research
  • Studying consumer trends
  • Consulting  R&D Departments, Sales people
  • Attending trade shows,
  • Organizing brainstorming sessions with engineers, scientist, businessmen, etc.

Conduct Idea Screening, during brainstorming sessions, with engineers, scientists, businessmen, lawyers, bankers, auditors, other professionals.

This process seeks to filter out unsound concepts and zero in on bankable-realistic concepts. During the idea-screening process, the following issues have to be addressed:

  • The benefits that can be derived from the product, and consumer reactions to the product idea have to be studied.
  • The size and growth forecast of the target market
  • The expected competitive pressure for the product idea
  • The industry trends the product idea is based on
  • Technical feasibility of the product as evaluated by a team of engineers and scientists. Cost-effective production processing have to be ascertained.

Economic viability of the product as evaluated by a team of bankers, auditors, entrepreneurs, lawyers and other professionals.

Prepares Concept Development and Testing through organizing working committee:

re: Hydrocar – runs on fuel cell that converts hydrogen gas into electricity.

  • Intellectual property issues have to be evaluated
  • Patent databases have to be searched out and submitted.
  • Target markets (identified consumers) have to be identified.
  • Product Features have to be deliberated carefully and deliberated in detail.
  • Product Feasibility has to be subjected to computer-aided rendering and rapid prototyping process.

Facilitates Business Analysis Studies by hiring several market research groups (MRG) and commission it to perform the ff:

  • Prepares and Distributes customer feedback forms to target markets. 
  • Undertakes competition feedback-related work.
  • Prepares Profitability and Break-Even Point Studies, including Estimated Selling Price and Estimated Sales Volume Studies.
  • Submits studies to ad hoc committee for review.

Conducts Beta-testing by:

  • Physical prototype is produced and subjected to a series of scientific-engineering testing.
  • Prototype is introduced in trade shows attended by carefully selected consumers.
  • Product adjustments are undertaken and conducts initial run of the product.

Determines Customer Acceptance by subjecting it to final market testing by selling it to test market area.

Facilitates Technical Implementation by following series of steps given below:

  • Finalizes quality system management created by team of engineers and technical consultants.
  • Finalizes operational working plans on production process and engineering support produced by team of engineers and technical consultants.
  • Finalizes estimated production resources (raw materials, industrial supplies, engineering materials, equipment and machinery) drafted by team of engineers and technical consultants.
  • Sources out resources requirements and conducts bidding process. This task is delegated to procurement specialists.
  • Facilitates logistical operations to deliver the required production resources to plant site before commencing on production.
  • Schedules production of the product.
  • Starts the production process.
  • Checks product quality at each stage of production.
  • Certifies completion of the production process.
  • Makes physical inventory of the finished products.
  • Warehouses the finished products in special storage facilities.

Conducts commercialization of the product by:

  • Contacting exclusive distributors.
  • Preparing distributors contracts.
  • Signing distributors contracts.
  • Conducting logistical operations to deliver the products to their places of distributions.
  • Delivering the products to the show rooms of distributors.
  • Selling of the products to consumers.  

Manufacturing Flow Management Procedures

Manufacturing flow procedures are put in place to guide production engineers in utilizing factors of production to process raw materials into finished products. 

Manufacturing process flow management outlines and traces process flow of production processes at different stages of production in order to achieve the following:

  • Identify bottlenecks in the production process in order to eliminate waste and minimize downtime in production.
  • Introduce improvements in the production process by correcting recurring bottlenecks or operational lapses.
  • To obtain significant cost-savings by minimizing defects or glitches.

The Process Flows are as follows:

  • Determines the characteristics the product should have by making decisions on the aesthetic and performance attributes of the product.
    • Aesthetic characteristics may include its appearance, thickness, color, etc.
    • Performance attributes includes their degrees of performance as it is subjected to various testing procedures in diverse conditions.  Attributes such as how fast or slow it is, maintaining good condition under heavy pressure, etc.
  • Formulates technical specifications of the product by specifying the properties of its various parts and components.
  • Decide on the kind of production processes that should be used in production:
    • Performs job production if the production is done to meet customers’ customized specifications on purchase order. Mass production of identical products or its parts and components meets this kind of production process.
    • Performs batch production if the production requires manufacturing of specific group of components in batches. Batch production is typically employed in the fabrication of engine parts of heavy equipment.
      • Machine A produces engine part no. 1 on Monday.
      • Machine B produces engine part no. 2 on Tuesday and so on so forth in batches.
    • Performs flow production if demand for the product is on a continuous basis. At one stage of production, a unit is manufactured then passes through the next stage of production without waiting for the whole batch to be completed. It involves a continuous process of manufacturing parts and sub-assemblies from one production stage to another until completion. This kind of production is employed in car-manufacturing. This production process hinges on the accuracy of sales forecast otherwise it could result into overstocking of finished products.
  • Specifies its mechanical parts, electrical parts, chemical parts, and other technical aspects.
  • Defines the resources needed to start the production process along with the sources of resources to be used if necessary.
  • Prepares a bill of production resources by making a checklist of raw materials, industrial supplies, engineering materials, equipment and machinery
  • Subjects the production resources to be utilized to different types of testing procedures by:
    • Chemical supplies subject to laboratory testing.
    • Mechanical items to engineering testing to check its durability, etc.
    • Electrical materials subjected to electrical testing so on and so forth.
  •  Prepares the various production stages by:
    • Checking workstations per production stage by:
      • Setting up equipment, tools & devices, machinery; make operating manuals accessible to be used by operators as references.
      • Production set-up requires checking chemical-mechanical-electrical- computer-related configurations or settings of these machines and make them ready to start the production process.
  • Starts the production process by loading raw materials into machinery and equipment, under each production stage, in order to gradually process it into finished products.
  • Utilizes inputs such as materials and supplies, in each production stage, in accordance with production manual.
  • Checks quality & quantity of each output under each production stage by verifying its characteristics.
  • Reports damages, deviations, malfunctioning of equipment at each stage of production.
  • Implement corrective measures such as installing of back-up equipment under each production stage  in cases of operational deviations/damages, malfunctioning of equipment, etc.
  • Checks quality and quantity of output at the final stage of production.

Please check the links for your reference:  http://www.technologystudent.com/designpro/mssprod1.htm

Procurement Management Procedures

Warehousing Management Procedures

Complete checklist: Warehousing Management Overview

Physical Distribution Procedures

Physical distribution procedures, in the context of supply chain management, is a two-way street comprising of logistical process of delivering materials, supplies, equipment needed in producing the desired finished product, and at the same time, the logistical process of launching the finished product from the factory to the warehouse before shipping it out to distributors, wholesalers, then finally to retailers, prior to consumption by the consumers.

Steps Involved:

  • Supplier hires delivery contractors or forwarders to conduct logistical operation of materials (e.g. raw and industrial), supplies (e.g. consumables), equipment and tools to plant site.
  • Forwarders decide on the logistical operations involved including choosing mode of transport (i.e. airborne or seaborne, land-based or combination of them) to deliver the goods to its intended  or point of destinations (e.g. warehouse or directly to plant-site or mill-site).
  • Warehouse men or plant-site people receives and checks the materials, supplies and equipment delivered.
  • Production engineers processes the raw materials using industrial materials, supplies and equipment to convert them into finished product.
  • Production people facilitate the rolling out of finished products from the final stages of production to warehouse.
  • Warehouse men facilitate the turning over of the finished goods to the exclusive product distributor.
  • The exclusive product distributor facilitates the distribution of the finished goods to accredited wholesalers.
  • Wholesalers deliver the finished goods to retailers.
  • Retailers sell the finished product to the consumers.

Customer Service Management

Customer-relationship management, is a management tool, whereby it launches customer-driven activities geared toward offering highly-desired customized and specialized services that easily respond to customer needs.

Performance Management

Supply Chain Performance Measurements:

The success of Integrating business processes in order to achieve optimum utilization of resources thereby attain sustainable growth and profitability, can be ascertained through supply chain parameters.

Complete checklist: Performance Management Procedures

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