Some of the major activities associated with supply chain management include:
1. Suppliers – You have to have a process for selecting and retaining the best suppliers who can delivery the highest quality inputs into the value chain at the best prices. This would include metrics to monitor performance such as quality and on time delivery.
2. Production – You have to have well developed processes for making your products, including procurement of materials, testing for product defects and poor quality, packaging and shipping, and distribution to the customer. Once again, you should have metrics to assess production output, quality and worker productivity.
3. Logistics – A good supply chain will have a fully integrated process for managing the customer order, routing the order to the correct production unit(s), procuring the right mix of labor and materials, moving the products to the customer and making sure every step is properly closed including receipt and payments for everyone within the overall value chain.
4. Forecasting – Supply chains include forecasting tools, web based communication and interfaces, production and sales reporting capabilities, and analytical models to help predict what customers will demand going forward.
5. Inventory Analysis – Tools are also important to analyzing your inventories, such as maintaining optimal inventory balances, where to invest, and making sure all parts are working together, such as knowing when to replenish an inventory item in coordination with suppliers and production units.
Finally, back in 1997 Supply Chain Management Review published Seven Principles of Supply Chain Management developed by Accenture Consulting:
1. Segmentation – Segment your customers into distinct groups for better focus and adapt your supply chain to serve these customer segments.
2. Customization – Customize your logistics network according to the requirements of each customer segment.
3. Market Signals – Constantly listen to market signals and adjust your demand plans within your supply chain to ensure consistent forecasts and optimal resource allocation.
4. Product Differentiation – Move towards differentiating your products so that you better meet the needs of your customers and improve the conversion cycles within your supply chain.
5. Supply Sources – Manage the sources of supply in a strategic manner to reduce your overall costs of owning materials and services.
6. Technology Layers – Develop an enterprise wide supply chain technology strategy to support various layers within your value chain, providing visibility into product flows, services, and information.
7. Performance Measures – Develop performance measures across various channels to evaluate end- user effectiveness and efficiency.