Decisions involved in supply chain management
Supply chain management includes taking two basic types of decisions. These are strategic decisions and operational decisions. Strategic decisions are essentialy made with a longer and a wider perspective. These have a close link with the corporate strategy and guide the supply chain policies from a design perspective. Operational decisions focus on day to day activities. These aim to efficiently manage the product flow.
There are basically four major decision areas in supply chain management, namely, location, production, inventory and transportation. Location decisions basically pertain to the geographic placement of the production facility, where should the product be stored, sourcing points, and so on. This is the initial decision that effects most of the other decisions pertaining to the supply chain management. The decision largely affects the revenue, cost and level of service. Next come the production decisions. These include taking a decision regarding which products to produce, the capacity of the manufacturing unit, the workload balancing and the quality control measures that have to be taken. Following these decisions are the decisions relating to the inventory planning. This includes ensuring that the uncertainties in the supply chain are ruled out and that there is enough stock at every stage. Efficient inventory management is crucial to the supply chain. Closely linked to the inventory decision are the transportation decisions. These have to be taken after considering various factors as they can have a great impact in terms of product pricing as well as service.
Each of these decisions has an impact on the supply chain and on the final product and service offered to the consumer. It therefore becomes imperative to take each decision with utmost care and a proper understanding of its impact.
Subscribe to the comments for this post