SWAMI VIVEKANAND UNIVERSITY,

SAGAR(M.P.)

A Study Of Supply Chain System In Manufacturing Industry

Abstract
[Draw your reader in with an engaging abstract. It is typically a short summary of the
document. When you’re ready to add your content, just click here and start typing.]

PRINCE KORI
[Email address]
 Table of
Contents
 What is manufacturing supply
chain management?
 The 5 main components of
manufacturing supply chain
management
 Are supply chain disruptions
the new normal?
 The importance of SCM for
manufacturers
 Manufacturing supply chain
management best practices for
SMEs
 Key takeaways
 Frequently asked questions
1.What is manufacturing supply
chain management?
Supply chain management (SCM) is a central
concept in commerce that refers to
the management of everything related to the
flow of goods of a company. It revolves around
every process that plays a part in raw materials
being transformed into finished products and
also involves aspects of after-sale activities like
handling warranty claims and returns.
Manufacturing supply chain management
includes all aspects of business that deal with
physical goods and their logistics: inventory
optimization, vendor management, logistical
processes like shipping, distribution, and
delivery, but also manufacturing processes such
as WIP (work in process) inventory
management, production scheduling, capacity
planning, demand forecasting, etc.
The role of SCM is to make sure that the supply
of goods is as streamlined as possible – that raw
materials make it to the warehouse or
production facility at just the right time and in
the right quantity; that production capacities
match demand as closely as possible; and that
lead times and product costs stay minimal. As
such, SCM can be seen as part of the
larger inventory management process.

 What are supply chains?

A supply chain is the whole distance that a
product travels from the beginning of its
manufacturing effort to finished sales. Far more
than just logistics management, it comprises
the sum of processes, people, businesses,
activities, information, and resources that are
needed to get a product or service from scratch
to consumers.
Therefore, a supply chain includes not just raw
materials but also the procurement
management of the materials. On the other end
of the pipeline, it is not just finished goods, but
also their distribution network, logistics
partners, and returns.
All of the organizations that constitute a supply
chain are joined together through physical and
information flows. Physical flows are the
transformation, movement, and storage of
goods and materials. Information flows, on the
other hand, allow the various players in a
respective supply chain to coordinate plans and
control the day-to-day flow of goods throughout
the supply chain.

2. The 5 main components of

manufacturing supply chain
management
There is no single correct way to manage a
supply chain because there are countless
different ways of doing business. Still, supply
chain management systems usually consist of
five essential phases: strategy, sourcing,
manufacturing, delivery, and returns. Let’s go
over these in a bit more detail.
1. Planning and strategy: Every
organization must plan and manage all the
resources needed to meet customer
demand for their product or service. The
supply plan should factor in everything from
material availability and production capacity
to labor and equipment requirements,
 logistical constraints, budgets, etc. The
more supply-related aspects of production
are considered in the supply plan, the fewer
surprises one can expect down the line. The
logistics of the production effort should
ideally be considered already in the design
phase of the product itself. A supply plan
can go into various levels of depth with
planning, for example in a multi-level supply
planning approach.
2. Sourcing: Ensuring high-quality raw
materials from reputable vendors is an
essential aspect of any production effort.
The process does not end once the suppliers
are under contract. Instead, the supply
chain manager is tasked with
continuous vendor management. Sourcing
also involves continuous procurement
planning and purchase order management
(ordering, delivery, authorizing payments,
etc.) throughout the manufacturing process.
The resilience of the supply side of
production also needs to be accounted for.
For example, through building long-lasting
supplier relationships or gaining alternative
sources that help ensure timely material
deliveries even amidst market disruptions.
3. Manufacturing: This central phase in
supply chain management details all
processes related to in-house production
i.e., the transformation of raw materials
(and services) into finished goods. Things to
take into account in the SCM system include
production efficiency, planning and
scheduling, inventory optimization, quality
assurance, packaging, etc. Most
manufacturing companies measure the
quality, production output, and worker
productivity of manufacturing processes to
ensure that the company is making products
that meet all quality
standards. Manufacturing-centric key
performance indicators (KPIs) are often used
to better measure the processes.
4. Delivery and logistics: This phase
entails the logistics of the whole production
operation. Coordinating customer orders,
scheduling deliveries, dispatching loads,
creating and sending invoices, receiving
payments, etc., all fall into the delivery
phase. Here too, the resilience of the system
should be factored in – an extra distribution
partner or delivery method might often
come in handy and contributes to a
 professional brand image, should disruptions
occur. For example, while you might have
designated vehicles for shipping,
outsourcing delivery to a logistics company
may prove a lower-cost alternative in some
circumstances.
5. Returns and after-sales: For the vast
majority of commercial products, an SCM
effort needs to have in place policies
regarding customer returns and warranty
care. Sure, an ideal product is one that
never breaks down or needs repairs, but the
reality is that mistakes and defects are
inevitable. Foresight into developing a
functional and cost-effective system for
after-sales equals more customer
satisfaction in the long run. The capacity of
supply chains to be unidirectional is an
increasingly important factor for today’s
manufacturers. Suppliers and producers
need networks that are quick to respond and
flexible in taking back defective, extra, or
unwanted products.

3. Are supply chain disruptions the

new normal?
In the not-so-distant past, basic supply chains were
quite straightforward and complex SCM was
practically the exclusive worry of large multinational
companies. A small business had a few long-standing
suppliers with locally sourced materials. Prices and
lead times were largely stable and fluctuated only
with the hum of the holiday season.
In recent years, however, and especially after the
pandemic, an increasingly globalized marketplace
and near-constant supply chain disruptions have
become the new normal across the entire
manufacturing industry. A 2022 study by Deloitte and
Manufacturers Alliance, points out that the era of
simple supply chains is essentially gone for good.
Shipping delays, raw material shortages, rising
shipping prices, and the resulting production
planning and inventory management issues have
become mainstays in manufacturing as a whole.
Increasing control over one’s supply chain by
implementing effective SCM practices is therefore
increasingly important for companies of any size.
This goes double for smaller players that need to
juggle tight profit margins and have fewer resources
for backups.
4. The importance of SCM for
manufacturers

Supply chain management is a natural part of any

company purveying physical goods, be it distributors,
retailers, or manufacturers. Still, SCM includes some
distinct considerations for the latter that we will look
at next.
Manufacturing has innate complexities
Manufacturing supply chains are generally far more
complicated than distribution. Materials and
components need to converge with labor and
processing in a timely, planned-out manner, and in
many consecutive instances. This implies precise
forecasting and capacity planning to adequately
schedule production. It also means that inventory
optimization efforts need to take into account a
number of constraints absent in most distribution
operations.
Manufacturing accounting is also more complicated
as every step in the supply chain incurs extra value
and added costs that need timely consolidating.
Outsourcing affects global supply chains
Another key aspect is that in the modern
manufacturing landscape, one brand often has
several companies contributing to manufacturing its
products. With the rising complexity of product lines,
many manufacturers especially in the SME space are
relying on partial or total sub-assembly production for
their revenue. Conversely, others are increasingly
depending on sub-contractors to produce some or all
of their components, and only assemble the final
products in-house.
As a result, sub-contracting and outsourcing are
seeing a big surge in a number of industries. This
inevitably translates into more complicated and
branching logistical chains which need extra
collaboration and management to avoid costly
mistakes.
Manufacturing is experiencing a digital
transformation
Finally, with the onset of Industry 4.0, modern
manufacturing is becoming increasingly reliant on
digital technologies and solutions. Manufacturers are
adopting Internet of Things (IoT) devices,
implementing robotics, and utilizing machine
learning. All to usher in more control over their
processes by way of real-time analytics and data-
based decision-making.
For supply chains and supply chain management, this
means much greater visibility. End-to-end supply
chain visibility, as made possible by digital
transformation, allows companies to better manage
the increasing complexities of their supply chains and
accelerate response times, increasing control and
traceability.
5. Manufacturing supply chain
management best practices for
SMEs
To end this article, here are 5 manufacturing supply
chain management best practices that any small or
medium manufacturer should focus on.
1.Facilitate collaboration with key nodes in
the supply chain. More collaboration with key
supply chain partners means faster response
times in case of sudden disturbances.
Implement supplier relationship
management practices to strengthen
partnerships. Consider vendors as partners
rather than service providers, simplify and
facilitate back-and-forth information sharing, and
check in with them frequently.
2.Keep up to date with shifts in regional
supply. Today’s logistics networks are dynamic
and fast-changing. While it certainly makes sense
to strengthen existing relationships, it’s also a
 good idea to keep a close eye on any news and
events that can introduce opportunities or
alternative sources. A continuous effort to
improve the efficiency of the supply chain is
among the basic tenets of effective supply chain
management.
3.Measure supply chain performance
regularly. The only reliable way to ensure an
efficient supply chain is by measuring its
efficiency. This is where a number of supply
chain-centric key performance indicators (KPIs)
come into play. Examples of useful metrics
include On-Time and In-Full Delivery, Customer
Order Cycle Time, Fill Rate, Inventory Days of
Supply, etc.
4.Increase supply chain resilience. Utilizing
production strategies like Just-in-Time (JIT) or
adopting pull-type workflows is perhaps the best
way to minimize waste and increase
manufacturing efficiency. However, these types
of optimizations are also more susceptible to
disruptions. With global supply chains in turmoil,
many manufacturing sectors are seeing a
resurgence of Just-in-Case (JIC) manufacturing
practices. This is a chief reason why you should
always keep a few extra vendors on the quick
dial.
5.Implement manufacturing software. Lastly,
implementing manufacturing software can make
 a decisive difference in your SCM efforts. Good
MRP systems and manufacturing ERPs include
built-in procurement tools as well as vendor and
order management modules, integrated with the
whole manufacturing operation. This provides
you with real-time info on all inventory
movements and introduces added visibility and
traceability over the whole supply chain. The best
providers also include Quality Assurance (QA),
Customer Relationship Management (CRM), and
Return Merchandise Authorization (RMA)
modules. Recent years have seen a growing
number of affordable yet capable cloud-
based manufacturing ERPs hit the market. These
constitute a viable and cost-effective choice for
SMEs.

6. Key takeaways
 Supply chain management is a central concept in
commerce that refers to the management of
everything related to the flow of goods of a
company.
 SCM includes aspects of inventory optimization,
vendor management, logistical processes like
shipping, distribution, and delivery, but also
manufacturing aspects like production
 scheduling, and capacity planning, as well as
customer returns and RMAs.
 The five main components of a supply chain
management system are planning and strategy,
procurement and sourcing, manufacturing,
distribution, and returns or after-sale support.
 Manufacturing supply chain management has
innate complexities compared to SCM for
distributors. This is because, in manufacturing,
raw materials are transformed into components
through labor, introducing constraints and
accounting considerations in each step of the
supply chain.
 Manufacturing supply chain management best
practices for SMEs include strengthening
collaboration with key suppliers, regularly
measuring supply chain performance, increasing
supply chain resilience by building backup
systems, and implementing manufacturing
software for added visibility and control over the
supply chain and vendors.