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Definition
The term supply chain management was coined by consultant Keith Oliver, of strategy consulting firm Booz Allen Hamilton in 1982. In essence, Supply Chain Management integrates supply and demand management within and across companies. Supply chain management and logistics, are used interchangeably Supply chain management (SCM) is the process of planning, implementing, and controlling the operations of the supply chain with the purpose to satisfy customer requirements as efficiently as possible. Supply chain management spans all movement and storage of raw materials, work-in-process inventory,and finished goods from point-of-origin to point-ofconsumption
Elements of SCM
Demand Creation and Forecast : Create a niche,Understand customer needs/preferences,Gauge Market Potential,Study competitor environment Product Development and commercialisation : Product, Packaging,Price Structure Distribution Network Configuration: Number and location of suppliers, production facilities, distribution centers, warehouses and customers. Distribution Strategy: Centralized versus decentralized, direct shipment, Cross Docking, pull or push strategies, third party logistics. Information: Integrate systems and processes through the supply chain to share valuable information, including demand signals, forecasts, inventory and transportation etc. Inventory Management: Quantity and location of inventory including raw materials, work-in-process and finished goods.
Product Development
Customer
Distribution
Inventory Management
Clear, Concise and correct information at the right time all the time is the key to an efficient Supply Chain Management System An organization needs to look at Data Warehousing and management as an investment and not a cost whose pay back will depend upon how effectively it is put to use Decisions will be based on information that is available to those who drive the business and therefore it becomes critical to the success of any enterprise If you do not know the rate of sales and the inventory on hand accurately you can never order enough and vice versa.
Information
Inventory Management
The term inventory management implies limitations of planning, ordering and forecasting in a system Given a set of macro and micro conditions in a dynamic business environment it is possible that decisions are not 100 % correct If you have low sales you will obviously have more inventory and why you will have low sales is simply because your product development or demand forecasts were inaccurate. Also it could be a great product with a reasonable demand forecast but due to lack of marketing and information to the customers it could not be sold as predicted Therefore it is important that an organization sees Inventory as part of a bigger picture and not in exclusion.The focus should be on what caused higher or low inventory and not on inventory itself Remmember that you are in business because of satisfying consumer demands and not because you manage inventory better than your competitors
How they do it ?
The secret, according to CEO Jose Castellano, is its reliance on communication, and the way it uses existing technology to take control of almost every aspect of design, production and distribution. Its design-and-manufacturing headquarters is a sprawling industrial complex with a vast network of underground tunnels lined with conveyor belts that transport clothing from one part of the complex to another Almost all of Zara's clothes are made here, right from the basic fabric dying stage. Designers are in daily contact with store managers, discussing which items are most in demand and which aren't This, supported by real-time sales data, allows the designers to action repeat orders and create fresh designs, and from their factory in La Coruna they are shipped directly to the stores, eliminating the need for expensive warehouses.
From design to engineering it for low-cost production to taking the gray fabric and printing it and finally Cutting sewing packing and shipping to respective store locations in just 21 days ,think About it ! It takes the coordinated and well synchronized team effort of 5 teams that share the same space at Zara Headquarters. Thats why it is important for a retailer not only to focus on inventory but also on all aspects of demand creation and its fulfillment something that Zara seems to have mastered.
Chill !!!