Cat One Principles of Supply Chain Management
Cat One Principles of Supply Chain Management
Cat One Principles of Supply Chain Management
Question one
Planning
One of the most crucial phases is this one. The strategies must be completed and implemented
before the start of the full supply chain. It is crucial to assess the viability, costs, profit,
workforce, and demand for the good or service. It will be very impossible for the business to
reap effective and long-term benefits without a sound plan or strategy in place. Therefore, this
phase needs to receive ample time. One can only move forward if the plans are complete and all
advantages and disadvantages have been taken into account. Every business needs a strategy that
information
A constant flow of information controls the world today. A company must keep up with all the
most recent information regarding the numerous facets of its production in order to be
successful. If the information is effectively and promptly communicated throughout the different
levels of the organization, it will be easier to understand the market patterns of supply and
Source
In systems for supply chain management, suppliers are extremely important. A variety of raw
materials are used to manufacture the goods and services that are offered to consumers.
Therefore, it is essential to obtain adequate quality raw materials at reasonable prices. A supplier
that can't deliver on time and on budget will inevitably cause costs for the company and damage
its reputation.
A corporation must have high-quality resources in order to produce high-quality items and
uphold its market reputation. This calls for suppliers to play a significant part in the supply chain
management system.
Inventory
It is crucial to keep an inventory in order to have a highly successful supply chain management
system. An inventory is a ready list of the things, supplies, and other necessities needed to make
a good or provide a service. To distinguish between available stock and required stock, this list
must be updated frequently. The ability to produce and sell products is impossible without
management. Currently, businesses are beginning to pay greater attention to this component due
Production
One of this system's most crucial components is production. Only when all the other supply
chain elements work together harmoniously is it feasible. It is crucial to have good planning, a
steady supply of commodities, and a well-maintained inventory before the production process
can begin. Testing, packaging, and last-minute preparations for distribution of the finished
Location
Any firm that wishes to thrive and survive must have a location that is profitable for it. Consider
the installation of a carbonated beverage factory in a region with limited water access. A basic
requirement of such a firm is water. The absence of water could hinder productivity and harm the
company's reputation. If a company is forced to share an already-rare raw material with the
neighborhood, it cannot exist. Therefore, a business' success depends on having a good location
that is well-connected and close to the source of key resources for production.
Transportation
Transport is essential for getting raw materials to the factory and getting the finished product to
customers. For the business process to continue running smoothly, timely product transportation
is essential at every level. Any company that pays attention to this element and looks after it well
will gain from the timely production and delivery of its items.A corporation must make every
effort to ensure secure and safe transportation. The transportation management system must
make sure there is no damage and little loss during transit, whether it is done internally or by a
third-party vendor. The two cornerstones of secure shipment are an efficient logistics system and
faultless invoicing.
Returned merchandise
A solid supply chain is made up of many different elements, including a facility for the return of
defective or malfunctioning goods and a highly responsive unit for resolving customer
complaints.
Nobody is perfect. Even machines can break down once every million times or more. A robust
business process should allow for the return of items in a variety of situations. Even the greatest
quality control procedures can occasionally fail for brief, unavoidable reasons. A company must,
immediately, recall the product(s) and offer an apology in the case of such errors, which are
invariably followed by customer complaints. This not only forges strong bonds with customers
Information like shipping date, time, ID, order number, freight information, and much more are
provided by SCM systems. Businesses can track KPIs and improve their strategic decisions by
analyzing these insights. With the use of a consolidated dashboard, you can monitor logistics,
production, and procurement from a single location and prepare for problems in advance.
One of the main SCM objectives is to rapidly and accurately complete an order from sale
through delivery. For the proper business, getting a head start with effective order processing
might mean everything. Order processing features simplify your order-related tasks, boosting the
proportion of flawless orders and raising customer satisfaction. Its main responsibilities include
order creation and delivery, including drop shipments and orders from numerous channels.
Storage Management
Physical warehouse operations benefit from a higher level of precise control provided by a
warehouse management system (WMS). Users may more effectively control what happens inside
the warehouse thanks to SCM features. All the factors that go into making a warehouse function
on a daily basis, such as workers, supplies, floor space, and operating procedures, are dealt with
by these systems.
Transportation Administration
Tools for managing transportation control the systems that manage shipments of materials. This
is frequently a combination of tools for managing the over-the-road fleet and monitoring for
other forms of shipping, such rail, air, or marine freight. You can identify problems early on
when you can monitor shipments, providing you the greatest time to correct the situation.
The issue of analyzing your supply chain activities is approached from somewhat different
aspects by sourcing procurement and supplier management solutions. Many of these tools take
into account factors like expenses, contract management, supplier quality, and others. They
oversee the sourcing and acquisition of supplies and raw materials and evaluate the technical
The key objective is to create superior net value for stakeholders. Using Porters’ value
According to Porter, competitive advantages come from the processes a company has, such as
marketing. The five key (primary) activities that generate higher profits include inbound
Inbound Logistics
The receiving, storing, and inventory management of a company's raw materials are all included
in inbound logistics. This includes all interactions with suppliers as well. Inbound logistics, for
an e-commerce business, can involve receiving and storing goods from a manufacturer that it
intends to sell.
Operations
Operations Procedures that turn raw materials into a finished good or service are included in
operations. All inputs must be modified in order for them to be suitable for output. In the e-
commerce example mentioned above, this would entail branding the goods, adding labels, or
Outbound logistics refers to all procedures used to deliver a finished good to a customer. This
includes delivery of the product but also includes storage and distribution systems and can be
external or internal. For the e-commerce company above, this includes storing products for
Marketing and Sales Strategies to enhance visibility and target appropriate customers—such as
advertising, promotion, and pricing—are included in marketing and sales. Basically, these is all
activities that help convince a consumer to purchase a company’s product or service. Continuing
with the above example, an e-commerce company may run ads on Instagram or build an email
Services
This covers customer service, maintenance, repair, refunds, and exchanges, as well as other
Supply Chain Strategy: Management makes the majority of the choices at this time. The choice
to be made considers factors including long-term forecasting and the cost of items, which might
be quite expensive if something goes wrong. It's essential to do some market research at this
time.
These decisions are made in light of the present and upcoming market circumstances.They make
up the organizational structure of the supply chain. After the layout is finished, the roles and
duties of each are distributed. All strategic decisions are made by top management or higher
authorities. There are several factors to take into account while manufacturing a product,
including the location of the plant (which should make it simple for transporters to load the
product and deliver it to the desired place), the location of the warehouse, and many more.
Demand and supply should be taken into account while developing the supply chain. To
understand client expectations, a market analysis should be done. The general public's awareness
of the situation, the competition, and the strategies they use to satisfy customer expectations are
the second component to be considered. As we all know, different markets have distinct demands
This stage includes everything, including predicting market demand, choosing the market that
will receive the finished items, and choosing the location of the facility. The goal of all
employees or participants in the firm should be to make the process as flexible as possible. A
planning.
Operations in the Supply Chain: In the third and final decision phase, a number of functional
decisions must be made in a matter of minutes, hours, or days. This decision-making process
aims to make things clearer and perform better. From taking the customer's purchase through
delivering the product to the customer, everything falls under this phase.
Think about a customer who requests a product that your business manufactures. Receiving
orders and transferring them to the manufacturing and inventory divisions are initially the
responsibility of the marketing department. In response to the client's request, the manufacturing
division sends the required item to the warehouse via the appropriate medium, where it is
Beginning with the time you pay for merchandise and ending with the time you receive money
for the sale of that inventory, the cash to cash cycle time shows the typical amount of time
needed to transform resources into cash flows. Three widely used financial metrics—days of
inventory (DOI), days of payables (DOP), and days sales outstanding—are used to measure it
(DSO). To calculate the cash to cash cycle time, first add DOI and DOP, then subtract DSO.
monitor consistently because it takes into account a few factors linked to handling and delivering
orders to your clients. In a nutshell, the perfect order rate is the proportion of orders that are
delivered in whole, on schedule, without a hitch, and with correct and thorough documentation.
Because it directly affects customer happiness, many firms view this as the most crucial supply
Rate of Fill
The fill rate is a crucial indicator that has an impact on consumer satisfaction. The proportion of
orders that are successfully fulfilled with the first shipment is shown here. In other words, it
represents the proportion of orders that don't need a second, third, fourth, and so on shipment.
The term "customer order cycle time" describes the typical interval (measured in days) between
the day a client places an order and the actual delivery date. It may be a sign of a problem with
payables, receivables, or inventory management if the cash to cash cycle is growing while the
Inventory Movement
Inventory days of supply and inventory turnover are closely related insofar as they both ask
whether a company is keeping more inventory on hand than is necessary. Start with the cost of
goods sold for a specific time period to calculate this KPI (e.g. for a month, quarter, or year.)
Next, multiply by your average inventory level at that time (which can be calculated by adding
your beginning inventory to your ending inventory and dividing the result by two.) In this
situation, a high value typically denotes excellent and efficient inventory management.
result in a bad client experience and cost your business important time and money. Simply
expressed, "reasons for return" refers to a measure that details the circumstances under which
customers return products. Simply categorize customer returns into common categories, such as
"defective item," "damaged product," "product no longer needed," and so on, to keep track of the
Punctual delivery
Rapid delivery times are more crucial than ever in today's fast-paced environment where nearly
every organization is battling to satisfy client demand amid supply-chain unpredictability. The
consumer and commercial purchase decisions. The customer will go elsewhere if you are unable
In most cases, on-time delivery is calculated as a proportion of orders that arrive on time or
ahead of schedule. The advantage of this is that it is rather straightforward; either you delivered
On-time delivery
With one minor exception, this measure is extremely similar to the on-time delivery metric. The
percentage of orders that were dispatched on time is what the term "on-time shipment" refers to.
Why the distinction? Because there may be a problem with logistics and transportation if there is
a difference between on-time deliveries and on-time shipments. For businesses that operate in a
small area of the world, this might not matter very much. But logistics and transportation are
more crucial than ever in a world economy that is becoming more and more globalized.
The cost of maintaining your supply chain might increase due to a variety of circumstances. For
instance, it's not unusual for manufacturers to speed up the delivery of incoming raw materials so
they can fulfill a customer order on schedule. Generally speaking, things cost more when you
need them quickly. Suppliers will be able to demand greater costs for those inbound goods if
they are aware that you have a tight deadline. Even if prices stay the same, shipping items to you
more quickly frequently comes at an additional expense. Some of those expenses will be
included in your cost of goods sold, but others will just be listed as an expense.
Question Two
Production
Make sure your facilities have surplus capacity and employ flexible production methods to
generate a variety of products in order to develop a responsive supply chain. Production can
quickly adapt to changes in consumer demand thanks to its flexibility. Furthermore, having
numerous smaller manufacturing sites adjacent to hubs for customers and distribution centers
Inventory
Optimizing responsiveness sometimes necessitates stocking more products and at more
warehouse sites when inventory is the driving factor. Effective inventory management enables
fast response to unanticipated demand swings. The cost of storing is higher with this strategy,
Location
Making convenience a top priority for the site driver frequently entails opening numerous
locations close to consumer bases. Fast-food businesses, for instance, open a lot of locations in
high-volume markets to be particularly responsive to their customers. They can respond swiftly
to customer demand by having several locations, but doing so raises operational costs.
Operating from a small number of locations and centralizing operations improve efficiency. An
illustration of location efficiency would be how e-commerce firms serve international markets
from only a few core sites while carrying out a variety of tasks. This makes each location more
productive, but it also leaves them open to disruptions, as was the case with the coronavirus
outbreak.
Transportation
Even though they are frequently more expensive, faster modes of transportation like air freight
enable quicker deliveries and higher responsiveness. FedEx and UPS are two businesses that
within 48 hours.
Transporting goods in larger batches less frequently using bulk carriers like ships or railroads
emphasizes efficiency. This method of transportation is more effective when the products come
As technology for gathering and distributing information becomes more accessible, user-
friendly, and affordable, its power as a driver is increasing. Analytics-based software employs
both internal and external data to help supply chain drivers perform better. For maximum
efficacy, your supply chain should gather and distribute precise and timely data produced by the
Market-leading supply chain solutions allow businesses to maximize the use of information to
boost internal responsiveness and efficiency through collaboration and end-to-end visibility,
even as the cost of the first four supply chain drivers keeps going up. Supply chain managers are
better equipped to respond swiftly and decide strategically and wisely based on key supply chain
E-commerce is the practice of doing business activities such as information sharing, relationship
network-commerce is the practice of businesses and customers purchasing and selling goods and
E-commerce has several uses in both retail and wholesale. E-commerce, often known as online
retailing, is the sale of products directly from a business to a customer using online stores built
on the electronic catalog and shopping cart concept. Cybermall is a single Website that provides
various goods and services in one place on the Internet. Through a Web browser, it draws the
A lot of financial companies are using e-commerce. Through online banking or E-banking,
customers can check the balances of their loan and savings accounts, transfer money to another
account, and pay their bills. Online stock trading is another use of e-commerce. There are
numerous websites that offer access to news, charts, company profiles, and analyst ratings on the
stocks.
A company's supply chain operations also leverage e-commerce. Some businesses create an
electronic exchange by working together to buy and sell products, exchange market data, and
manage back office data like inventory control. The flow of raw materials and completed items
among the business community's members is accelerated as a result. The application of business
wary of their rivals and worry that divulging trade secrets in large-scale electronic exchanges
directly. Electronic auctions with bids are also included. A unique kind of auction called bidding
enables potential purchasers to place a bid on an item. For instance, airline firms provide
customers the chance to estimate the cost of a seat on a certain route at the chosen time and day.
Customers of financial institutions can make financial transactions on a website run by the
institution using online banking, often known as E-banking. Other names for online banking
E-books, periodicals, and the creation of digital libraries and catalogs are all examples of
An application called an Internet booking engine (IBE) assists the travel and tourist sector in
supporting online reservations. It makes it easier for customers to reserve hotels, flights, vacation
packages, insurance, and other services online. Given that the aviation sector has one of the