Supply-chain management, also known as SCM, refers to the oversight and synchronization of materials, information, and finance as they move through the process from supplier to manufacturer to wholesaler to retailer to the end consumer. It involves the coordination and integration of these flows both within individual companies and among multiple companies. Essentially, SCM encompasses the entire journey of goods from the initial customer order to the sourcing of raw materials, supply, production, distribution, and final delivery to the end user.
The concept of SCM involves managing a network of interconnected businesses that work together to provide the necessary products and services demanded by end customers. This term was defined by Harlan in 1996 as “the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers”.
If a company manufactures a product using parts purchased from suppliers and sells these products to customers, it has a supply chain. Supply chains can vary in complexity, ranging from simple setups to more intricate systems.
SCM is a process utilized by companies to ensure that their supply chain operates efficiently and in a cost-effective manner. It encompasses a series of steps that a company takes to transform raw components into the final product. These steps can be categorized into five basic components: plan, develop (source), make, deliver, and return.
Plan: The initial stage in supply chain management is referred to as plan. A plan or strategy must be devised to address how a particular good or service will meet customer needs. A significant portion of this strategy should concentrate on planning a profitable supply chain. This is the strategic aspect of SCM. Organizations must have a strategy for managing all the resources utilized to meet customer demand for their product or service.
Source: The subsequent stage in supply chain management is source. It entails establishing a strong relationship with suppliers who provide the necessary raw materials for the company’s product.
In this stage, companies not only identify reliable suppliers but also plan methods for shipping, delivery, and payment. Suppliers are chosen to deliver the goods and services required for creating the product. During the make phase, the product undergoes manufacturing, testing, packaging, and scheduling for delivery. This step is managed by supply chain managers who schedule the necessary activities for production, testing, packaging, and preparation for delivery. It is the most metric-intensive part of the supply chain, allowing companies to measure quality levels, reduce output, and evaluate worker productivity.
During the logistics phase, customer orders are received and delivery of the goods is planned. This stage is commonly referred to as logistics in supply chain management. Companies coordinate the receipt of orders from customers, develop a network of warehouses, select carriers for product delivery, and establish an invoicing system for payments. The final stage of supply chain management, known as return, involves addressing customer questions and accepting returns of defective products.
Many companies face challenges in this part of the supply chain as they must create a system that can handle defective and surplus products returned by customers and provide assistance for problems with delivered products.
Supply chain management includes important aspects like supply chain software, which is advanced technology that improves operations throughout the entire process. Modern supply chain software allows companies to streamline and enhance their critical supply chain operations from beginning to end, giving them a competitive advantage.
Organizations can enhance their cost-efficiency and maximize productivity by implementing supply chain software. This software automates and supports all aspects of the supply chain process, providing comprehensive functionality including inventory management. Inventory management optimizes tracking and managing raw materials, production components, finished goods for sales orders fulfillment, and spare parts for field service and support.
By eliminating excess and waste, valuable real estate can be freed up for other important purposes, while also minimizing storage costs. In terms of order management, supply chain software can greatly speed up the entire order-to-delivery cycle by enhancing the efficiency of sales order generation and tracking. It also enables dynamic scheduling of supplier deliveries to better meet demand, as well as quicker creation of pricing and product configurations. Additionally, supply chain plays a role in procurement.
Supply chain software packages can automate and streamline all activities and tasks related to sourcing, purchasing, and payable. This can be implemented across a company’s entire supplier network. The software enables businesses to form stronger relationships with vendors, evaluate and control their performance effectively, and enhance negotiations to benefit from volume discounts and other cost-saving measures. With the expansion of companies on a global scale, their supply chains become increasingly intricate.
Coordinating numerous warehouses and transportation channels becomes a challenging task despite having supply chain software in place. However, businesses can enhance on-time delivery performance and increase customer satisfaction through supply chain. Supply chain software allows organizations to improve forecasting and planning by better predicting customer demand and adjusting procurement and production processes accordingly.
By utilizing supply chain software, businesses can save costs by avoiding unnecessary purchases of raw materials, eliminating manufacturing overruns, and preventing the need to store excess finished goods or lower prices to sell products quickly. This software also simplifies and expedites the inspection and handling of defective or broken goods, on both the buying and selling sides of the business. Additionally, it automates claim processing with suppliers, distributors, and insurance companies. Many supply chain solutions also offer optional additions or modules that enhance related activities.
The implementation of supply-chain management in Bangladesh spans across various sectors. Supply Chain Management (SCM) involves effectively and efficiently managing the flow of goods and services within a supply chain. This entails creating a strategic route plan to promptly collect and deliver items from suitable suppliers at every stage of the assembly line, aiming to achieve optimal cost and time efficiency.
The introduction of goods and services at a faster rate than the established trend is essential for ensuring optimal operational smoothness and giving a business a competitive edge in marketing. To achieve this, logistics is employed to physically implement this strategy. All types of companies, including manufacturing, service-oriented, and progressive ones, have logistics departments in place to execute supply chain management (SCM) plans. These departments ensure that incoming goods and services are made available to various departments, allowing them to meet production schedules and deliver finished products to clients in the most efficient and cost-effective manner possible.
Logistics relies on different infrastructure and machinery to implement the SCM strategy, which also extends to the overall economic activity of a country. As a result, it is crucial for a country to have seamless and corruption-free logistical infrastructure, including roads, railways, waterways, seaport and airport customs facilities and regulations. These elements are essential for the economic sustainability of a country.
The logistics page’s main article introduction aims to provide an overview of supply chain management. This is important because the topic is not commonly discussed in the news, resulting in a lack of communication about it. Consequently, many managers find it difficult to grasp the complexities of supply chain management, despite facing challenges in managing their own supply chains. In Bangladesh, while media coverage extensively focuses on logistical infrastructure, especially port facilities, there is insufficient acknowledgement of the significance of supply chain management and the recognition that modern logistical infrastructure should be a national priority. This emphasizes the need for those in authority to develop and implement a strategic plan.
A strategic plan for the development of logistical infrastructure presents a unique opportunity. It allows for improvements in functional infrastructure, while also generating numerous job opportunities. By establishing new businesses and awarding lucrative contracts, existing companies can experience growth. This plan encompasses enhancements in various areas, such as roads, railway lines, ports, airports, and more. One suggestion is to focus on improving the condition of the currently underutilized Mongol Port.
Mongol port has the potential to serve as an alternative to the congested Chitchatting port. However, this option is currently unexplored due to various unclear reasons. It is unfortunate that we are unable to provide an alternative port to alleviate congestion in Chitchatting, especially when there is a suitable port available. Moreover, there is a need to enhance the Internal Container Depots (ICED) facilities, enabling swift and efficient transportation of goods to their destinations within and near Dacha if required.
Other recommendations to include in the strategic plan are: developing port facilities for transporting goods from Chitchatting Port via barge-mounted transportation, enhancing Bangladesh Railways, increasing off-doc facilities in Chitchatting port for efficient container movement, providing customs compensation to streamline customs procedures and increase transparency. Supply Chain Management (SCM) inherently requires planning, so a national strategic plan would greatly benefit the entire national economy, similar to how SCM plans benefit smaller entities like businesses.
The implementation of the national strategic plan would include sections focused on financial requirements. To develop a viable financial plan, it is important to consider private sector involvement and prioritize transparency and strict supervision. This can be achieved by having a government team consisting of competent and trustworthy officials. In Bangladesh, the logistics news is currently tilted towards highlighting positive aspects. Chitchatting port has recently introduced a preprocessed berthing system called fixed day window berthing.
The internationally recognized practice of the system would involve delaying the arrival and berthing of ships by one month. There are also reports indicating efforts to address the licensing problem faced by logistics companies. The controversial Terminal Handling Charges (TECH) that was recently abolished remains a topic of discussion in the logistics sector as they try to determine who will bear the costs, as it is applicable in most countries except Bangladesh.
Supply Chain Management (SCM) and logistics must be recognized as essential components of the strategic economic planning conducted by the country’s economic think-tank. It is feasible to consider strategic models for economic development that focus on a Hub-Port, which would support the growth of regional economies around the port’s activities. Various businesses would emerge to serve the increasing number of maritime visitors, including hotels, recreational facilities, and restaurants.
In a port based development scheme like Chitchatting, new businesses would engage in financial deals and venture capitalists would emerge, merging with other successful companies to create a limitless and versatile environment. The natural beauty and potential for tourism make Chitchatting an ideal location for this type of development. Bangladesh should begin to formulate a strategic plan focused on developing logistics infrastructure centered around a world class port in Chitchatting. This plan would also encompass various related developments that can occur in a port based economy.
