Critical Major Flows of Supply Chain Management

Posted by vikas sharma on January 27th, 2020

The certified supply chain management courses already have a number of takers in different parts of India. If you are keen to pursue this course, you should invariably have a thorough understanding of supply chain management and some of its major flows. Let’s start with what is supply chain management in the first place –

An Overview of Supply Chain Management –

Supply chain management, also known as SCM, refers to oversight of finances, materials, and information when they proceed from the suppliers to wholesalers to manufacturers to retailers and finally to the customers in a pre-defined manner. If you are intrigued to know more about supply chain management programs, then you should be aware of the major flows it revolves around. Some of the prime flows of SCM are dug out below –

The Prime Flows of Supply Chain Management –

Supply chain hints at the management of flows. Supply chain usually consists of five types of flows, which include product flow, information flow, financial flow, value flow, and risk flow. If you are looking to enroll for certified supply chain management courses, then make sure to get acquainted with these flows in detail, with the help of the following excerpt –

• Product Flows –

Product Flow refers to the transit of goods from a supplier to a customer. It also includes dealing with consumer-support services or customer needs like consumables, input materials, and the likes. Product flow involves rejections or returns as well.

If you want to learn more about supply chain management programs, then it’s crucial to know that midst and industry situation, there will be a manufacturer, supplier, customer, wholesaler, and retailer. The customers might be the internal parts of the same company.

For an instance, in a fabrication hub, different types of raw steels are generally fabricated into producing different materials in cutting, welding centers, general machining, and then they are finally assembled to be sent for shipment to the consumers. ‘Flow’ in this plant is happening from one assembly section/process to those who are having a relationship as the consumers or suppliers.

• Financial Flows –

The financial aspects of supply chain management should be deemed from two perspectives. The first perspective is comprised of pricing and investment. While the second one refers to the fund-flow.

Pricing and investments will be added while inching forward in the supply chain. The optimization of supply chain cost can directly contribute to overall profitability. Likewise, the optimization of supply chain investment can influence the return on the capital’s optimization in a certain organization.

In the case of a supply chain, there would be a consistent flow of funds from the customers of the product back down via the supply chain. Financial funds or revenues usually flow from the final customers, who are the one and only sources of money for a supply chain.

• Flow of Information

Before opting for certified supply chain management courses, you should know that SCM revolves around an assortment of information such as product data, bills of materials, pricing, descriptions, order or consumer-related information, supplier or distributor related information, delivery schedules, commercial documents, financial information, cash flow, title of products, and the likes.

It invariably requires a great deal of coordination as well as communication with the suppliers, subcontractors, transportation vendors, and numerous other parties. The flow of information in the SCM is bidirectional. A prompt and better flow of information can empower the overall efficacy of the supply chain and transform the quality of performance.

• The Flow of Values

A supply chain owns several values producing different procedures revolving around a chain for providing added values to the customers. At every stage, there are physical flows involving in production and distribution. While at the other stages, there will be some value additions to the services or products.

These can hint at the value chains mainly because as the products or services move from a point to another, it will garner a lot of values. A value chain refers to a series of interconnected activities that are needed to bring a service or product from conception through various phases of production, product delivery to the end-consumers, and the final disposal.

This is how; supply chain is very closely interwoven with the value chains. This is the way supply chain and value chain are supplementing as well as complementing each other. While practicing a supply chain with a value flow is a way more complicated engaging more than just one chain. All these channels could abet in originating supply point as well as the final point of consumption.

• Risk Flow –

Risks in SCM crop up because of many uncertain aspects that are broadly covered undersupply, demand, price, lead time, and the likes. Risk in the supply chain is a very potential occurrence of a failure or an incident or to grasp the opportunities of delivering products/services to the consumers in which its outcomes can cause an economic loss for the entire supply chain.

Hence, risks can appear in different forms of price volatility, disruptions, and poor product quality, glitches in the internal process, deficiency of infrastructure, natural calamity or any other incidents butchering a firm’s reputation.

The risk factors include some other aspects including, inventory financing, cash flow constraints, delayed cash payment, and the likes. Risks could be internal as well as external and move either way with the flow of product, finance, value or information.