What are the Seven Principles of Supply Chain Management?
The seven principles of supply chain management is a traditional article on supply chain control. Written more than two decades ago within the year 1997, by using David Anderson, Frank Britt and Donavon Favre and posted in the Supply Chain Management Review. Supply chain control changed into a very new idea at that point. Much has changed and stepped forward in the logistics community over those past two decades. A holistic approach, taking into consideration supply chain management has developed over the years.
1. Segmenting Customers in accordance with Services
This prioritises the needs of the customer. Professionals and business people are up-skilled to understand their customers better and cater to their demands. There is a process called ‘Segmentation’ where customers are divided, the most primitive is the ABC analysis, a type of inventory management, whereby customers are divided based on management and profitability. Segmentation helps to characterise customers so that accordingly a target audience can be severe better, it is also done on the basis of trade, industry and product.
2. Logistic Networks to be Tailor-made
Logistics becomes crucial when customers are segmented on the basis of service needs. In order to adapt to their demands, different logistics strategies need to be developed. However, one type of logistic may not work out for the logistic based in a different industry or country. Logistics developed for the consumers in India may not hold for the customers in America, it would be required to be nominalised according to that country and their market. Different logistics hold to different demand segments.
3. Keeping Up With The Demands of Market
For expansion, one needs to share the supply and demand data. A strategic approach with the trading partners, so as to avoid useless stock and waste of goods, professionals are taught to develop a supply chain. Often companies team-up with supply chain consulting companies to achieve this intricate task. The best and easiest way to accomplish this efficiency is to first look at one’s sales history and that of the trading partners. Then comes the Top-Down approach( from general to specific) and Bottom-Up Approach(from specific to general) which a supply chain consultant could best enlighten one on.
4. Modifying Products Closer To Customers
These days companies manufacturing gadgets assemble the product only after an order has been placed about that specific product. Why is it done so, is to increase the variation within the product. There are two principles that one needs to remember- ‘Standardisation’ and ‘Differentiation’. Standardisation is a homogeneous approach to customers’ needs and Differentiation considers heterogeneous needs. Former offers global competition, more supply chain consulting companies might take interest in reducing risk and increasing demand, whereas the latter is limited to local competition. By standardizing products correctly, companies could pressure the purchasing price down significantly because of the economic system of scale and enhance global enterprise operations. So standardization is something which you shouldn’t forget.
5. Strategising Sources
Strategy for outsourcing is crucial. What is more important is for it to be contemporary, pacing with time, without compromising the essence, the expertise of the company.
6. A Strong IT and Supply Chain
To preserve re-engineered business strategies (that, at the final level, abandon the functional orientation of the beyond), many progressives companies had been changing rigid, poorly included with organization-extensive structures. Yet to a lot of those companies will find themselves victims of the powerful new transactional systems they installed location. Unfortunately, many main-facet records systems can capture streams of records however can’t without difficulty translate it into actionable intelligence which can beautify real-world operations. So a powerful IT network is the need of the hour. Decision making and their execution on various levels, also to get that holistic perspective, harmonisation with the supply chain consulting companies, the inflow of production services and information, can be systematically organised with strong and wide technological supply chain network.
7. Expanding Network and Channels
Companies have to ensure profitability. They have to be strong on both service and financial ends. Expansion of performance channels to far-reaching consumers and at the same time ensuring efficiency with effectivity is something the companies require and supply chain management are often there to ensure success.
A customer wants the shipment to arrive on time, properly priced and billed without damages wrapped perfectly. An incredible supply chain management determines the authentic profitability of an enterprise and its services. These seven ideas can not make a huge effect on the supply chain manner however whilst applied in collaboration with each other can enhance the supply chain operations to a magnanimous level. It can create wonders in phrases of services that even the modern-day superior technology cannot remit for decades ahead.
