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What is a Supply Management Chain?

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Essentially, supply management chain refers to handling the flow of different goods and services right from the raw material stage up to the point they get to the consumer. Therefore, the production flow begins right from the raw products to delivering the final product and finally to the consumer. Freight Logistics Solutions specialise in offering logistics solutions and supply chain management. They primarily develop a network of suppliers or links in the chain whose purpose would be to move the final product from the suppliers that provide raw materials to institutions that deal with consumers directly.

How Supply Management Chain Works

A traditional supply management chain system is made up of five key components;

  1. Planning

This component involves developing a plan and managing all the necessary resources needed to satisfy consumer demand for a company’s service or product. When a company establishes a supply chain, it will need to determine metrics that will measure the effectiveness, delivery value and efficiency. At the same time, meet company goals.

  1. Sourcing

A company will then have to source suppliers whose main job will be to provide the services and goals necessary to create the product. After choosing suppliers, they will now have to establish the processes necessary to monitor and manage the supplier relationships. Some of these main processes are; ordering, receiving, taking care of inventory, and authorising suppliers’ payments.

  1. Manufacturing

A company will then organise the activities which will aid in accepting raw materials, product manufacture, testing for the quality of the product, packaging for shipment and schedule for product delivery.

  1. Delivery and Logistics

Transportation is a key part of the supply management chain. After manufacturing is complete, the company will then take charge of coordinating customer orders, monitoring schedule deliveries, dispatching loads, sending an invoice to customers and receiving payments.

  1. Returning

It involves creating a process or network that will be in charge of taking back defective, unwanted or excess products.

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Why is Supply Management Chain Important?

An effective supply management chain will reduce the cost, time and waste in the production chain. The industry has become time conscious in the supply chain as retail sales will automatically send signals to manufacturers of replenished goods. Suppliers can restock retail shelves as fast as the product is sold.

There is a way this process can improve and it’s by analysing the data from supply chain partners. The aim of analysing these data is to determine areas where a company can make further improvements. Through analysing data from supply chain partners, three scenarios emerge where an effective supply management chain will increase the value of the supply chain cycle. These scenarios include;

Identifying Potential Challenges

When consumers order more products that a manufacturer cannot deliver, buyers will launch complaints regarding poor service. By analysing data, manufacturers can foresee product shortage before buyers get disappointed.

Optimising Products Dynamically

There are seasonal products that often have a limited shelf life. Once their season comes to an end, they get sold at deep discounts or they get scrapped. Hotels, airlines and other companies that deal with perishable products will alter their prices dynamically just to meet the demand. By using analytic software, companies can use the same forecasting techniques to improve margins for hard goods.

Improving The Allocation of Inventory

Analytical software tools always come in handy. They will help allocate resources dynamically and develop a work schedule based on the sales forecasts, available orders, and the promise of raw materials to be delivered. Manufacturers can confirm the delivery date of a product as soon as an order is placed.


What Features Make a Supply Management Chain Effective?

When a company’s supply management chain is effective, it can defend its business reputation and its sustainability for the long term. Some of the key features that make a supply management chain effective are;


It means the ability to get unstructured data from social media, traditional data sets available through traditional ERP and accessing structured data from the Internet of Things.


It involves improving collaboration with suppliers highly will mean using cloud-based commerce networks to aid multi-enterprise partnership and engagement.


The supply management chain has to harden its systems and ensure the chain is safe from cyber hacks and intrusions, which should concern a company.

Cognitively Enabled

A supply management chain needs to be automated, which will act as a control tower by coordinating and conducting decisions throughout the chain cycle.


The ability of analysis has to be scaled with data concerning real-time. By doing this, the insights will be fast and comprehensive.


Supply management chain refers to the functions and activities that are involved in manufacturing products or providing services from raw materials to finished products and lastly being made available to consumers.

About the author

David Evans

David is Editor-in-chief.

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