From the picture of the SCM in the previous, in general we can see that SCM has five basic components as follows:
- Plan – companies need a planning or strategy to manage all available resources efficiently with costs less and able to meet the needs of consumers.
- Source – companies/factories must choose who will be the supplier of their products.
- Production – this is the manufacturing step. Companies / factories should be able to measure the level of quality, production output and worker productivity. Product testing, packaging and preparation for delivery of checks need to be considered and can be improved.
- Deliver – this part known as logistics. Companies coordinate orders received from customers, storage of products, choose how to send and who will deliver it and set up the payment/invoicing system.
- Return – this is a problematic part for many companies. In the above plan (point 1), companies must create a responsive and flexible systems to be able to take back a defective product, and providing service to customers who have have problems with delivery.
From above five points, we can see that the companies that make up the supply chain are linked together through physical flows and information flows. Physical flows involve the processing & transformation, movement, and storage of goods and materials. They are the most visible part of the supply chain. Information flows allow the various actors in the supply chain to coordinate their long-term plans, and to control the day-to-day flow of goods and material up and down in the supply chain.
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