Supply chain management is the management of the network used to acquire raw materials, production, and distribution to the customers. It can be said to be the process of attaining raw materials, production, storage, and supply to the end-users. Every business or company has to employ good purchasing and supply chain management if it has to succeed in its production.
Supply chain management can also be defined as the organization of the traditional business processes within a company’s supply chain and across its business processes to improve it to produce better returns in the long run. It is good to note that the supply chain is the set of activities that are linked with the flow of goods and services from their source to the customer (Lambert, 2008:1). Supply chain management is therefore the process of managing this supply chain. This can be done through the use of the software. Supply chain management is important in recognizing the number of suppliers that can be accessed by the company, their location, the distribution centres, management of inventory, and warehousing facilities. It also helps in determining the strategy to be used in the integration of information within the supply chain. It is the work of the supply chain management to arrange the exchange of finances or the cash flow within the supply chain of the company. In this paper, I will look at the six rights in the theory of supply chain management and their relevance to the Coca-Cola Company. I will also give an overview of some of the processes in the supply chain.
The supply chain market takes two strategies: product pull and product push. In product pull, customers determine the kind of supply channel to be adopted by the business. Focus is directed on the product’s demand rather than the production capacity. On the other hand, the product push supply chain is determined by the company’s production. It can be said to be influenced by products supply rather than demand. Both product ‘push” and demand “pull” have distinguishing characteristics. In demand-pull supply chain, production, and delivery decisions are initiated by the entry of a customer order rather than a forecast. For it to be successful, information and management technologies should be capable of providing a fast flow of customer demand information. The demand-pull supply chain reduces production costs, inventory, and warehouse expenses. Push based supply chain is built based on a long-term forecast. It is appropriate for industries because it puts more emphasis on the long term rather than the short term like in the product pull strategy (Lambert, 2008:17).
The management of the supply chain is related to the just in time (JIT) principle. This principle is used in both manufacturing and non-manufacturing process for the delivery of products and services. Businesses that use just-in-time principles include; banks, hospitals, insurance companies, and hotels. JIT principle was originally associated with Toyota managers as a problem-solving mechanism to eliminate waste. It is a supply kind of approach used in a business to perk up its production through a diminution of the inventory procedure and other correlated costs. It assists in the production of goods and services without wastage of time and resources. JIT helps businesses improve on their efficiency, quality, and profits earned. However, the inventory strategy has some risks associated with it; one of these risks is that, if the supply is interrupted, the business can incur increased overhead costs trying to adjust with the interruption (Graham, 2005:372). Another risk is that internal issues such as labour strikes might lead to low production or a slow production process that might not be able to meet the orders from a particular firm.
- Graham, G. 2005, Exploring supply chain management in the creative industries, Volume 10, Issue 5 of Supply chain management. Bingley, Emerald Group Publishing.
- Lambert, D. 2008, Supply chain management: processes, partnerships, performance. London, Supply Chain Management Inst.