What are the Basics of Supply Chain Design?

M. McGee

Supply chain design usually comes down to three areas; receiving raw materials, manufacturing a product and transporting the product. Each of these steps has several basic points that will improve a supply chain regardless of the product being produced. The biggest factor in an effective supply chain is proactive thinking. A business should never believe that the system that is currently used is the best; there is always room for improvement. By constantly looking at the current supply chain design, it is possible to make small improvements that amount to big savings.

An illustration of a supply chain.
An illustration of a supply chain.

One of the biggest improvements to modern supply chain design is computer-based operations. There are a number of different supply chain programs that will assist businesses in the creation, maintenance and improvement of every aspect of the process. These programs will often help a business find ways to improve or point out problem areas that would have gone unnoticed without them.

A supply chain manager in a small organization may find vendors and authorize purchase orders as well as ensure delivery.
A supply chain manager in a small organization may find vendors and authorize purchase orders as well as ensure delivery.

In the raw materials stage, an effective supply chain design is based on timing. It is very rare that a business wants a stockpile of raw materials that it isn’t using. In fact, most businesses want as little surplus input material as possible. Materials that sit around waiting for processing may be damaged or destroyed, causing loss to the company. In most cases, supply shipment timing should be set up to receive more raw material right before the current stock runs out.

The manufacturing stage is very different based on the systems used and the goods produced. In general, this stage is about efficiency. Keeping workers operating at peak productivity will improve output into the next stage of the supply chain.

Keeping people productive is not always as simple as it seems. The biggest factor in productivity is happiness. Often times, if a worker feels like she has a personal stake in her job beyond simply continuing to have it, her productivity improves. Whether this involves incentives like raises or personal involvement from her supervisors varies based on the worker and industry.

The final step in supply chain design is the one furthest out of the company’s control. When selling a product to the next stage in the supply chain, it is important to understand whom the product is sold to. If the seller is a retailer, the business should look at the ways its product is displayed in the store. This may lead to packaging or marketing improvements. If the product goes to other manufacturers, they may have suggestions as well.

In addition, businesses shouldn't discount shipping practices or packaging. Low-cost shipping isn’t always the best option. Getting goods to a location when and how they are supposed to get there is often the best choice. When packaging a product, businesses should keep the packaging minimal to reduce costs while making sure it protects the good from unintentional damage. In some cases, making a product more durable will result in happier customers and lower costs.

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