The employees working in Supply Chain are covering a wide range of tasks. Accordingly, we have many departments and functions that are part of the Supply Chain, especially in large and multinational companies. Let’s take a look at them.
S&OP – Sales and operations planning is a joint activity of the top management. So why am I discussing
it in an article about Supply Chain Functions? Well, because it affects the
entire Supply Chain. In its core, S&OP is an integrated business plan that
aligns sales and production plans. This is the base of the supply chain to plan
orders and deliveries. In many occasion, procurement and warehouses receive
this plan and have to act accordingly. Hence the Supply Chain planner needs to
take the given plan and see what Supply Chain needs to do to fulfil the
requirements of the production team. And as well to provide feedback to the
S&OP board. This requires very high analytical skills as well as good
stakeholder management.
Demand planning collects data from sales and creates a distribution and warehousing
plan. The aim is to meet future demand. So it is not a sales plan, where the
sales team sits and estimates what will be sold, the promotions and new
products. It is the second step, where the Supply Chain assures that they will
have enough goods in the stores and warehouses to fulfil the orders. The most
famous demand planning department is the one at IKEA. They are planning as far
as 84 weeks in advance, making sure that products from factories all over the
world reach the sales centers in sufficient quantity and at the right time.
Logistics
deals in general with all movement of goods. Whether this is raw materials,
semi-finished products or the final product, if it moves around, logistics
takes care of it. No matter if within the company or outside. Also, it covers
all possible means to move the goods: planes, trains, trucks, conveyor belts or
pallet trucks. And people movement is as well often managed by the logistics team.
Many times, warehouses come under logistic, as it seems quite logical. After
all, logistics bring in the goods and take them out, why not to take care of
their storage.
Transport if
often mixed up with logistics, as it is the most visible part of it. Transport
is the movement of people and goods outside the company. It is as well most
often outsourced to specialized companies as it requires significant investment
into trucks and busses.
Distribution
is again a part of logistics and in its core a form of transportation. The
difference is that distribution transports goods from a wholesaler or producer
to shops. Drivers in distributions have more responsibilities than to transport
the goods. In some cases, they are active salespersons. In some others, their
job is to collect the returnable packaging, unsold items, and to collect the
order for the next day. This is all these small trucks and vans you see in the
early morning racing around your neighborhood. They usually have their assigned
area where they deliver every day.
Customs clearance is in today's connected and an international world so important
that it deserves a couple of sentences on its own. Here in the UAE, where I
live and work, we have not only international borders. We have as well free
zones, where similar rules and regulations apply as if it is a foreign country.
The job around customs clearance is not only about import taxes and fees.
Countries need different certifications and declarations of conformity to allow
export or import. Special rules apply to different groups of goods. And the
rules change, all the time. No one knows when and how. You arrive at the
customs office and find out that you need one extra document. If you have
people who do it well, pay them well. They make it look easy, but it is not.
Warehousing
has one main goal: to keep your goods secure and protected from anything that
could damage it. It can be heat or cold, wild animals and pests, or humans.
They also make sure they know what they have in stock, and what they have
received and issued.
Inventory management is often a part of warehousing, but not necessarily. Imagine having
a couple of warehouses, plus two distribution centers for good consolidation.
And then some more inventory in the small stores in the back of your stores.
Inventory management takes care that the goods are there where they are needed,
not too little and not too many. They ship goods to and between the places,
compare with the demand plan, go back to sales to create promos if they deem that
some items will expire or not sell.
Customer service is, sometimes, part of the supply chain. Mostly for goods where the
support deals with shipment and replacement of goods. In this case, they
usually do not provide any kind of technical help.
There are many ways to dissect the Supply Chain. This is one of them, to show the many pieces of the jigsaw called the Supply Chain. Like almost anything in Supply Chain, it depends on the industry and company who is doing what and what are the departments called. So, use this as a guideline, but not a rule.
Sources and links:
Centralized Supply Chain planning at IKEA - Case Study
Sales and Operations Planning (S&OP): Process, Challenges, and Expert Tips
Comments
Post a Comment