Manufacturing is one of the major parts of the supply chain system. Supply chain management manages supply chain planning, designing, production, delivery, and return. Production is manufacturing.
Manufacturing is a very important stage of the supply chain. You have to know suppliers, and production very well to be able to control the quality and flow of the whole supply chain system.
What is manufacturing?
Manufacturing means large-scale production. Any companies or factories that turn raw materials into finished products are manufacturers.
Examples of manufacturing such as coco-cola- which produces soft drinks. Levi’s- which makes jeans, Dell- creates computers, Apple- which invents and produces iPhones and apple computers from raw material.
Basic components of the supply chain?
Based on www.tutorialspoint.com the five basic components of the supply chain are: Plan, Develop (Source), Make, Deliver, and Return.
Plan
The planning stage is the initial stage of the supply chain system. A good plan will maximize profit and minimize cost.
Develop (Source)
Developing or designing the product and making the decision to produce the component itself or source the component is a second major decision after the planning stage.
Make
Following the decision of producing or sourcing components, is the manufacturing phase. Manufacturing is also a production process. This process involves inventory control, production process control, sales forecast, etc. very important steps in supply chain management
Deliver
Once the product is finished, it is time to deliver the finished goods to the customer. Delivery falls under the logistics part of the supply chain.
If it is domestic delivery, trucks will need to be booked. Air or ocean movement will apply if it is an international delivery.
Return
Every business tries to cut costs on the return process because the return process does not create any value for the company. It is an ultimate goal for every supply chain professional to minimize the return and at the same time keep a high standard of customer satisfaction.
The most common ways to decrease returns are:
- Avoid mistakes in picking orders. Always try to send the correct product to the correct customer
- Build more virtual assistants to help customers online
- Consolidate returns to one location for easy sort and handling
- Ask the customer responsible for the return shipping
What is manufacturing in supply chain management?
Manufacturing is a vital part of supply chain management. The primary goal of supply chain management is to cut costs and at the same time fulfill all customer request.
manufacturing includes raw material purchase, component outsourcing, production of quality products. labor, machinery etc, all these activities involve a lot of money. It is key to manage the manufacturing phase well so one can manage the whole supply chain system’s cost.
Are manufacturers and suppliers the same?
Manufacturers refers to factories which make the product. Suppliers can be manufacturers or retailers, or wholesalers. Anyone can be your suppliers as long as they provide you with the product. Manufacturers and suppliers are not the same, unless your suppliers make the product themselves.
The premier goal of supply chain management is to cut costs and at the same time keep the supply chain going. Supply chain professionals prefer to deal with manufacturers directly, becuase It is more economic without middle man. It is better to control the product quality when you talk to the person who produces the product.
Sometimes one product may have hundreds or thousands of components. It will be much cheap to outsource standard components and only produce major parts in-house. Most of times you will deal with manufacturers and retailers, wholesalers at same time in procurement process. Even you can limit your tier one suppliers as direct manufacturers, you can not control tier two, or tier three suppliers.
Tier 1 suppliers- the factories or companies which supply you
Tier 2 suppliers- the factories or companies which supply your tier 1 suppliers
Tier 3 suppliers- the factories or companies which supply your tier 2 suppliers
Suppliers control is a tricky part in supply chain management. It is easy to only control your direct suppliers. It is difficult to control your supplier’s suppliers.
Is manufacturing part of logistics?
Manufacturing does not belongs to logistics. logistics stands for the movement of the item from point A to point B. Logistics does not involve product production.
Logistics only involves shippers and receivers. Unless the manufacturer is also the shipper to ship the product, the manufacturing phase does not include in the logistics.
Importance of manufacturing in supply chain
The standard of the qualified supply chain is agile and resistant. Resistant supply chain means the supply chain system can run smoothly even when there are unforeseen things happened.
The common strategies to prevent supplier interruption in supply chain is standardization and diversification
Standardization
Standardize your components, so it is easy to produce or outsource from many suppliers.
When you have a big pool of suppliers who can provide you the items, you can switch among your suppliers easily and quickly. Your supply chain will not disrupt if one or two of your major suppliers have problems becuase you have many other suppliers to back up.
Diversification
You want diversify your suppliers on different regions, or different countries. That’s why you see most fortune 500 companies have manufacturing place all around the world. Diversification of suppliers not only lower cost but also make the supply chain system more resilient.
if a natural disater happened in one country, you can produce your product in another country. if tariff is higher in one country, you can switch your production to different countries quickly without disrupting your supply chain system.
It takes time and money to have global foot print of your business so does supply chain.
