Components of Supply Chain

Components of Supply Chain – SCM Blog-04

Supply Chain Management is defined as the systematic flow of materials, goods, and related information between suppliers, companies, retailers, and consumers. There are three different types of flows in supply chain management: which we will understand one by one:

  • Material flow 
  • Information / data flow 
  • Money flow 

Let’s look at each of these flows in detail and also see that they How effectively they can be applied to companies.

Material flow 

Material flow involves a smooth flow of an item from producer to consumer. This is possible through various warehouses between distributors, dealers and retailers.
The main challenge faced is in ensuring that the content flows through different points of the chain as quickly as a list without any stoppage. The faster it runs, the better for the enterprise, as it shortens the cash cycle.
The item can also flow from consumer to producer for any kind of repair, or exchange for end of life materials. Finally, the entire goods flow from customers to their consumers through different agencies. In this scenario there is a process known as 3PL. The customer is also an internal flow within the company.

Information flow: 

Information / data flows include reports on quotes, purchase orders, monthly programs, engineering change requests, quality complaints and supplier performance from supplier to customer side.
From the manufacturer’s side to the consumer’s side, the information flow includes reports and details of steps taken on the company’s offer, offer, purchase order confirmation and deviations, invoices on inventory, invoices etc.
For a successful supply chain, regular interaction between manufacturer and consumer is necessary. In many cases, we can see that other partners such as distributors, dealers, retailers, logistics service providers participate in the information network.
In addition, many departments of the manufacturer and consumer side are also part of the information back. Here we have to keep in mind that the internal information flow with the customer is different for home construction.

Money flow :

Based on the invoice raised by the manufacturer, the customer checks the order for correctness. If the claims are true, then money flows from the customer to the respective producer. The flow of money from the productive side to the customers is also seen in the form of debit notes.
In short, to achieve an efficient and effective supply chain, it is necessary to streamline all three flows with minimal efforts. It is a difficult task for a supply chain manager to identify what information is important for decision making. Therefore, he would like to see the visibility of all flows at the click of a button.

SCM- Flow Components 

After understanding the basic flows involved in supply chain management, we need to consider the various elements present in this flow. Thus, we will understand here about the various components of the supply chain flow.

Seamless Supply -Transportation: 

Transport or shipment is necessary for a seamless and uninterrupted supply. Factors affecting shipments are: economic uncertainty and volatility and fuel price differentials, customer expectations, globalization, improved technologies, changes in the transportation industry and labor laws.
The key elements affecting transport must be considered, as these are dependent on ensuring order is fulfilled as well. The major factors are: Long-term Decisions 

Long-term Decisions: 

Transport managers must accept the supply freight flow And design network layout accordingly. Now, when we say long term decision, we mean that the transport manager has to choose what should be the primary mode of transport.
The manager has to understand the product flow, quantity, frequency, seasonality, physical characteristics of the products and special handling requirements, if any. In addition, the manager must decide on the extent of outsourcing for each
And every producer, while considering all these factors, must carefully consider the fact that the network should not be static.
For example, for transporting stock to regional cross dock facilities for sorting small loads, packaging and broking to individual customers, stock destinations can be assembled through contract transport providers.

Lane operation decision: 

These functional decisions stress daily freight movement. Here transport managers work on real-time information on product requirements at different system nodes and inbound and outbound to meet the demands of their services at the least possible cost The shipping lane must support every step of the product.
Good decision-making managers easily handle the information and use their profit opportunities and assure that the product is transferred to them immediately, whenever demanded, in just the right amount. Additionally, they also save costs on transportation.
For example, a shipment has landed from a supplier who is based in Delhi and in the same week, a product is also needed in Mumbai, so you won’t be able to send the material to a customer, so if the manager is already selling this product If required, the material could work with both the customers.

Career Options and Modes: 

Choosing a mode of transport is a very important decision. With the improvement in means of transport, the modes of transport available in traditional transport modes in the past may no longer be the preferred option.
For example, the rail container service may offer a package that is cost-effective and effective in comparing motor transport. When making decisions, the manager has to consider the service criteria that need to be met, such as the delivery time and the date of special handling requirements and while taking into account the cost element, which will be an important factor.

Dock level operations: 

It includes the final level of decision making. This includes planning, routing and scheduling. For example, if a train is being loaded with orders from different customers, the task of dock-level managers is that the driver is informed about the most efficient route and plans are placed in order of planned stops.


Warehousing plays an important role in the supply chain process. In today’s industry, the demands and expectations of customers are undergoing tremendous change. We want everything at our doorstep – that too with efficient pricing. We can say that the management of warehousing functions demands a separate merger of engineering, IT, human resources and supply chain skills.

To neutralize the efficiency of the inbound function, a flat, case Ideal to accept materials in a durable vehicle like box or instant is. For labeling structure, equipment selection and commercial The process calls for the types and quantities of orders processed.
In addition, the number of stock-keeping units SKUs in distribution centers is an important consideration.

Warehouse Management Systems (WMS) takes products to their storage location where they should be stored. The functionality required for the completion and optimization of the receiving storage and shipping operations is then supplied.

Sourcing and purchasing:

Sourcing and procurement are an important part of supply chain management. The company decides whether it wants to conduct all the exercises internally or if it wants to get it done by another independent firm.

This is commonly referred to as the Make vs. Purchase decision, which we will briefly discuss in another chapter.

Return management:

Return management can be defined as management that invites a merger of challenges and opportunities for inbound logistics. A cost-effective reverse logistics program combines the available supply of returns with product information and demand for repairable items or repossessed materials.

We have three pillars that support return management processes. These are as follows:

Speed: It is quick and easy return management and the creation of Change Material Authorization is very important to automate decisions about what (RMAS) to do and how to process them, if so.

Basically, speed return processing tools include automated workflows, labels and attachments, and user profiles.


Visibility: To improve visibility and predictability, information needs to be captured early in the process, ideally before delivering a return to the receiving dock. The most effective and easily implemented approach to achieve visibility is web-based portal, carrier integration and bar-code are identifiers. 

Control: In the case of return management, synchronizing requirements to physical movements is a common issue that producers have to be very careful to handle and pay attention to receipts and reconciliation and update stakeholders of upcoming quality issues. In this case, reconciliation activates visibility and control throughout the enterprise. The main control points in this and the process are regulatory compliance, conciliation finalization and quality assurance.

Software solutions can help speed up return management by supporting user profiles and workflows that track content with web-based portals by labeling and documentation by label supply and documentation and deliver information periodically Reconciliation by exception-based reporting. These characteristics, when executed with the three columns described above, support a reliable and predictable return process to calculate value across the company.

Post-Sales Service:

Now the ordered shipment is over, what is the next step? Post sales service becomes an increasingly essential factor in the supply chain as businesses provide solutions rather than products. Post sales services include selling spare parts, installing upgrades, inspecting, maintaining and repairing, training and offering education and consulting.

Currently, with the increasing demands of customers, a large amount of after-sales service proves to be a profitable business. Here, services are basically Bisham and value-added services are provided before sales service.

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