WHAT IS SUPPLY CHAIN MANAGEMENT ? 5 MINUTES EXPLANATION !!

Summary

This video offers a concise introduction to supply chain management, explaining its key components and flows. It uses the example of a milk supply chain to illustrate the journey from raw materials to end customers. The video identifies five main participants: suppliers, producers, distributors, retailers, and customers. It outlines three major flows: product, information, and financial. Lastly, it defines supply chain management as overseeing the entire manufacturing and delivery process, touching on processes like manufacturing, warehousing, strategic planning, demand forecasting, and transportation.

Takeaways

• 🌐 A supply chain is a global network that coordinates the production and distribution of goods and services from raw materials to end customers.
• 🚚 The supply chain involves three key flows: product flow, information flow, and financial flow, which are essential for its operation.
• 🛒 Key participants in a supply chain include suppliers, producers, distributors, retailers, and customers, each playing a specific role in the process.
• 🏭 Producers, also known as manufacturers or service providers, transform raw materials into finished goods or services.
• 📦 Distributors purchase products in bulk from producers and sell them to customers in larger quantities than individual consumers would buy.
• 🏬 Retailers sell products in smaller quantities directly to end customers, fulfilling their immediate needs.
• 💼 Supply chain management encompasses the entire process of manufacturing a product or service, from raw materials to delivery to the customer.
• 🔍 Strategic planning, demand forecasting, and supply planning are crucial processes within supply chain management for efficient operations.
• 📈 Information flow is bi-directional and includes data such as product specifications, inventory levels, and order details, acting as the 'fuel' for the supply chain.
• 💵 Financial flow involves the movement of funds from the end customer back through the supply chain, with the final consumer being the primary source of revenue.
• 📝 Supply chain management also involves processes like order fulfillment, procurement, and transportation planning to ensure product distribution and delivery.

Q & A

What is the definition of a supply chain?

A supply chain is a global network that produces and distributes goods and services from raw materials to end customers via information flows, product flows, and financial flows. It is a multi-level system that generally crosses the boundaries of several companies to coordinate the related flows.

Can you provide a simple example of a supply chain?

A simple example of a supply chain is the milk supply chain, where milk goes from dairy farms to storage in a warehouse, then to processing in a manufacturing facility, followed by storage in distribution centers, and finally transported to retailers like supermarkets for customers to purchase.

What are the five key participants in every supply chain?

The five key participants in every supply chain are suppliers, producers, distributors, retailers, and customers. Suppliers provide raw materials or services, producers manufacture goods or services, distributors deliver products in bulk to customers, retailers sell products in smaller quantities to individual customers, and customers are the end-users of the products or services.

What is the role of a supplier in the supply chain?

A supplier is a person or a company that sells a product or service to another entity, providing raw materials, components for assembly, energy, and so on. They are the starting point in the supply chain, ensuring that the necessary materials are available for production.

What does the term 'producer' refer to in the context of supply chains?

In the context of supply chains, a producer, also known as a manufacturer or service provider, is a business that manufactures goods or services. They process raw materials and produce finished goods, which may also include assembling products using components called sub-assemblies provided by suppliers.

What is the function of distributors in the supply chain?

Distributors, also known as wholesalers, buy inventory in bulk from producers and deliver it to customers in a bundle of related product lines. They typically sell to other businesses and in larger quantities than individual consumers would purchase.

How do retailers contribute to the supply chain?

Retailers keep goods on hand and sell in smaller quantities to customers. They offer products and services to fulfill the needs of individual customers who purchase in small quantities, acting as the final point of sale before the product reaches the end consumer.

What are the three major supply chain flows?

The three major supply chain flows are product flow, information flow, and financial flow. Product flow is the movement of goods from the supplier to the customer. Information flow involves data such as bills of materials, product data, inventory data, and order details. Financial flow refers to the movement of funds from the end customer back through the supply chain.

What is supply chain management and what processes does it involve?

Supply chain management refers to the management of a product or service's entire manufacturing flow from raw materials to the delivery of the finished product to the customer. It involves processes such as manufacturing, warehousing, strategic planning, demand planning, supply planning, order fulfillment, procurement, and transportation planning.

Why is information flow considered crucial in supply chain management?

Information flow is considered crucial in supply chain management because it involves data such as product specifications, inventory data, and order details, which are essential for coordinating the supply chain activities. It is bi-directional and acts as the 'fuel' that drives the supply chain, ensuring that all participants have the necessary information to make informed decisions.

How does financial flow work within the supply chain?

Financial flow in the supply chain involves the movement of funds from the end customer, who is usually the only source of real money in the network, back down the chain. This flow of funds or revenues passes through the supply chain's various links, from the final consumer to the suppliers, ensuring that all parties are compensated for their contributions.

Outlines

00:00

🚚 Introduction to Supply Chain Basics

This paragraph introduces the concept of supply chain management, explaining it as a global network that coordinates the production and distribution of goods and services from raw materials to end customers. It uses the example of a milk supply chain to illustrate the journey a product takes from dairy farms to the supermarket. The paragraph identifies five key participants in a supply chain: suppliers, producers, distributors, retailers, and customers. It also outlines the three major supply chain flows: product flow, information flow, and financial flow, emphasizing their importance in the supply chain ecosystem.

05:05

📈 Understanding Supply Chain Management Processes

The second paragraph delves into the processes involved in supply chain management, which includes manufacturing, warehousing, strategic planning, demand planning, supply planning, order fulfillment, procurement, and transportation planning. It highlights the importance of these processes in ensuring the efficient flow of products from raw materials to the end customer. The paragraph concludes with a call to action for viewers to subscribe for more information on the supply chain and to check out other videos for further understanding of logistics.

Keywords

💡Supply Chain

A supply chain is a global network that coordinates the production and distribution of goods and services from raw materials to end customers. It involves multiple companies and includes the movement of products, information, and finances. In the video, the example of a milk supply chain illustrates this concept, highlighting the journey from dairy farms to supermarkets.

💡Supply Chain Management (SCM)

Supply Chain Management refers to the oversight and organization of the entire process of manufacturing a product or service, from the acquisition of raw materials to the delivery of the finished product to the customer. It is crucial for ensuring efficiency and effectiveness in the supply chain. The video emphasizes SCM as a key component in managing the various flows and processes within a supply chain.

💡Product Flow

Product flow is the movement of goods from suppliers to customers. It is described as the 'lifeblood' of the supply chain, ensuring that products are available at the right time and place. The script uses the milk supply chain example to show how product flow works, from the dairy farm to the supermarket shelves.

💡Information Flow

Information flow encompasses the exchange of data such as bills of materials, product data, inventory levels, and order details within the supply chain. This flow is bidirectional and is essential for coordinating the supply chain activities. The video script mentions that information flow acts as the 'fuel' for the supply chain, highlighting its importance in keeping the system running smoothly.

💡Financial Flow

Financial flow represents the movement of money within the supply chain, from the end customer back to the suppliers. It includes revenues and payments that are crucial for the financial health of the supply chain. The video explains that the final consumer is typically the source of real money in the network, emphasizing the importance of financial flow for the sustainability of the supply chain.

💡Suppliers

Suppliers are individuals or companies that provide raw materials, components, or services to other entities in the supply chain. They play a critical role in the initial stages of production. The script gives examples such as dairy farms supplying milk and electronic component suppliers, illustrating the diversity of suppliers in a supply chain.

💡Producers

Producers, also known as manufacturers or service providers, are businesses that manufacture goods or services. They transform raw materials into finished products or provide services. The video mentions producers as a key participant in the supply chain, such as companies that process raw materials or assemble products like necklaces from gold or smartphones from various components.

💡Distributors

Distributors, or wholesalers, purchase products in bulk from producers and then deliver them to customers in related product lines. They typically sell to other businesses rather than individual consumers. The video script uses the example of pens being distributed to small shops, showing how distributors facilitate the supply chain by making products available to retailers.

💡Retailers

Retailers are businesses that sell products and services to individual customers in smaller quantities. They play a crucial role in making products available to end consumers. The video script describes retailers as the link between the supply chain and the customer, such as supermarkets where customers purchase milk or yogurt.

💡Customers

Customers are individuals or organizations that purchase and use products or services. They are the end recipients of the supply chain and rely on producers, distributors, and retailers to fulfill their needs. The video script emphasizes the importance of customers as they drive the demand for products and services, making them a central part of the supply chain.

💡Strategic Planning

Strategic planning in the context of supply chain management involves defining the design and direction of the supply chain. It includes setting goals, identifying strategies to achieve those goals, and making decisions about the sourcing of materials. The video script mentions strategic planning as a key process within SCM, highlighting its role in shaping the overall efficiency and effectiveness of the supply chain.

Highlights

Supply chain is a global network that coordinates the production and distribution of goods and services.

Supply chain involves information flows, product flows, and financial flows.

Key participants in a supply chain include suppliers, producers, distributors, retailers, and customers.

Suppliers provide raw materials, components, or services to the supply chain.

Producers or manufacturers convert raw materials into finished goods.

Distributors or wholesalers buy in bulk and sell to businesses in larger quantities.

Retailers sell goods in smaller quantities directly to end customers.

Customers are individuals or organizations that purchase and use products or services.

Product flow is the movement of goods from suppliers to customers.

Information flow includes data such as bills of materials, product data, and inventory information.

Financial flow involves the movement of funds from the customer back to suppliers.

Supply chain management oversees the entire manufacturing flow from raw materials to customer delivery.

Key supply chain processes include manufacturing, warehousing, strategic planning, demand planning, and supply planning.

Order fulfillment involves sales order processing and billing.

Procurement is about purchase order processing, received confirmation, and invoice verification.

Transportation planning and execution are crucial for the distribution of products.

Supply chain management is essential for coordinating related flows across multiple companies.

Transcripts

welcome to this video of logistics and supply  chain basics in this video you will learn about  

supply chain management in five minutes  we will see what is the supply chain key  

components and flows of the supply chain and what  is supply chain management so let's get started  

first what is a supply chain let's take a look at  this very simple example of a milk supply chain  

as a customer you go maybe every day to  purchase milk or yogurt from a supermarket  

actually for this milk to be available at the  right time and right place for you it goes  

through a long journey it goes from dairy farms  to storing the milk in a warehouse then processing  

in a manufacturing facility then to storage in  multiple distribution centers then transported  

to retailers like supermarkets to be bought by  you and other customers so a supply chain is a  

global network that produces and distributes goods  and services from raw materials to end customers  

via information flaws product flows and financial  flows it is a multi-level system that generally  

crosses the boundaries of several companies to  coordinate the related flows we have five key  

participants in every supply chain one suppliers  a supplier is a person or a company that sells  

a product or a service to another entity the  supplier can provide raw materials components  

for assembly energy and so on some examples  can be provided meat electronic components  

plastic and so forth two producers producers  also known as manufacturers or service providers  

are businesses that manufacture goods or services  companies that process raw materials as well as  

companies that produce finished goods fall under  this category besides producers of finished goods  

assemble their products using components called  sub assemblies that are provided by suppliers  

examples can be producing necklace from gold  flour from wet phone from different components  

and so on three distributors distributors also  known as wholesalers are companies that buy  

inventory in bulk from producers and deliver it  to customers in a bundle of related product lines  

they usually sell to another businesses and in  larger quantities than an individual consumer  

would generally purchase examples can  be distributing pens to small shops  

4. retailers retailers keep goods on hand  and sell in smaller quantities to customers  

retailers offer products and services to fulfill  the needs of individual customers who purchase in  

small quantities and finally customers individuals  or organizations who buy and use a product or  

service are known as customers customers rely on  producers distributors and retailers to fulfill  

their product and service requirements so for the  examples we mentioned previously the customer is  

the one going to be eating mean based products  buying and using the phone and so on now the  

major supply chain flows are the following first  we have the product flow which is the movement  

of goods from the supplier to the customer  it is like the lifeblood of the supply chain  

second the information flows so bills of  materials product data specifications and pricing  

inventory data customer and order details delivery  scheduling supplier and distributor documentation  

designation of goods and services are  all elements involved in what we call  

information flows in a supply chain supply  chain management involves a lot of data sources  

the information flows are bi-directional and  are considered as the fuel for the supply chain  

third the financial flow there will be a flow of  funds in the supply chain from the end customer  

of the product back down the chain financial  funds or revenues flow back through the supply  

chains other links from the final consumer  who is usually the only source of real money  

in the network the question now is what is supply  chain management supply chain management refers  

to the management of a product or services entire  manufacturing flow from raw materials to delivery  

of the finished product to the customer the main  supply chain processes are manufacturing which is  

about planning scheduling and executing production  warehousing that includes storage of physical  

inventory in different facilities strategic  planning that defines strategic supply chain  

design and strategic sourcing of materials demand  planning that involves predicting demand based on  

historical data for example and supply planning  that involves for example calculating quantities  

to be delivered to each location to meet customer  demand order fulfillment that involves sales order  

processing and billing business process  procurement that is about purchase order  

processing received confirmation and invoice  verification and finally transportation planning  

and execution and costing processes related to  the distribution of products this was a quick  

explanation of what is supply chain management  if you want to know more about each process of  

the supply chain make sure to subscribe to get  notified on my upcoming videos if you want to  

know about logistics meaning check out my video  that explains logistics in less than 3 minutes