Supply Lines: Retail stores have to depend on supply chain managers to ensure the smooth running of their business

It?s 11:30 in the morning, a call is placed to the Compaq office for a PC required by 2:30 in the afternoon. And a brand new Compaq PC set is at your door! This is the gift of the new age where the focus is on satisfying the customer to the best of one?s abilities. And to survive in this competitive market place, organisations have to introduce concepts to facilitate the proper flow of information and services from the production end to the user end. This is supply chain management.

A supply chain is a network of facilities and distribution options that perform the functions of procurement of materials, transformation of these materials into finished products and the distribution of these finished products to customers. Supply chains exist in both the service and manufacturing organisations although the complexity of the chain may vary depending on the firm and the industry. It requires an understanding of the fundamental principles of retail supply chain management and collaborative commerce which helps retailers enhance the value they derive from the supply chain.

Supply chain management (SCM) is the timely management of materials, information, and finances from the supplier to manufacturer to wholesaler to retailer to consumer. This involves co-ordinating and integrating these flows both within and among companies.

The goal of any effective supply chain management is to reduce inventory with the assumption that products will be made available as and when needed.

What do I have to do?

Supply chain management (SCM) is the combination of the art and science of improving the way a company procures raw materials it needs to make a product or service and deliver it to customers. There are five basic components of SCM.

It involves proper planning. You need a strategy for managing all the resources that go towards meeting customer demand for your product or service. The source is also important. Choosing the suppliers is important since failure to requisition the raw materials on time will spell doom for the business. Develop a set of pricing, delivery and payment processes with suppliers and create metrics for monitoring and improving the relationships.

You also need to maintain records of inventory of goods, verifying them, transferring them to your manufacturing facilities and the payments made to suppliers. Manufacturing is of course, the most important step. You also need to schedule the activities necessary for production, testing, packaging and preparation for delivery (delivery is of paramount importance); co-ordinate the receipt of orders from customers, develop a network of warehouses, pick carriers to get products to customers and set up an invoice system to receive payments.

Also, a supply chain manager has to create a network for receiving defective and excess products back from customers and supporting customers who have problems with delivered products. This is important for generating goodwill.

What should I study?

You should be a graduate in any stream.

What next?

SCM solutions today focus on the collaborative planning of demand and supply, integration with business operations and synchronisation of the supply chain with customer expectations.

Organisations are forced to enhance the effectiveness and efficiency of the supply chain to maximise profit, growth and market share in the light of increasing customer demands, shortened product life cycles and shrinking profit margins. Companies are looking at implementing strategic business and IT initiatives to enable them to build customer focussed supply chains. Logistics and supply chain management is becoming a buzzword among corporates and is gaining importance amongst management students.

Companies like Hindustan Lever, Marico, Gillette, Frito Lay, LG, Philips, Tata Motors, Hyundai, Ashok Leyland, Asian Paints, Nerolac are operating with separately managed SCM (Supply Chain Management) departments. There is an emergence of a new category of companies like FedEx, UPS, DHL etc which are providing specialised logistics and supply management services.

Where to study

• Indian Institute of Management, Ahmedabad
• Indian Institute of Management, Bangalore
• SP Jain Institute of Management, Mumbai
• Management Development Institute, Gurgaon
• Narsee Monjee Institute of Management and Higher Studies, Mumbai