There are several factors which need to be considered while developing an efficient SCM. The main factors are
They are mentioned below
Location & Transportation decisions
Geographic location of production plants, warehouses and distribution centers are the most important factors in determining the of a supply chain. These factors also impact the revenue, cost and level of service. Customer locations also play a vital role in such decisions.
Determining the appropriate mode of transport is also an important area in Supply Chain Management. Air shipments are fast and at the same time expensive also. Meanwhile shipping by sea or rail is cheaper but since large amounts of inventory have to be transported it necessitates holding large amounts of inventory which in turn affects inventory holding cost.
Type of product is one of the most important factors and the whole supply chain management depends on the type. Supply chain management for solid end products will be different from liquid end products. For Icecream and some medicines which require sub zero temperature throughout the whole supply chain process, the supply chain management needs to be designed based on the availability of cold containers. Also for some foods and medicine hygiene can be the most important criteria while designing the supply chain system.
Production decisions which include type of products to be produced, in which plants those products will be produced, scheduling production etc. play an important role in determining the Production Decisions.
Inventories are the most important part of Supply chain and exist as raw materials, semi-finished goods or finished goods. Proper inventory management and control is very crucial as it determines the cost of production, hence the profitability. Proper inventory management plan has to be in place to avoid any excess or lower inventory in the production system.
Distribution strategy is one of the most important factors behind the supply chain management plans. The distribution strategy deals with the relationship and the connection between the suppliers and the warehouse managers. Supply chain management focuses on improving the distribution strategies to optimize the overall supply chain process.
Supply Chain Integration
Supply Chain Management needs to integrate all the information available in one system to effectively and efficiently track the progress. That’s where the ERPs come into picture which integrate all the suppliers, procurement managers and inventories into one system to control the overall supply chain system for a particular organization.