Supply Chain is the Future! What is Supply Chain? – Part II
Prerequisite Video before watching this video:
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At this Video, you will learn about –
What is Supply Chain?
Learn about Supply chain model from a Supply Chain story.
What is Supply Chain management
Key stake-holders in Supply Chain
Key functions within Supply Chain
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Transcript of video
Hello Everyone!
Welcome back to SupplyChainWay.com.
This is the part 2 of the topic what is supply chain. So if you have not yet seen the part 1 of this video what is supply chain you can look for the link to that video in the description of this video so let’s get started with the part 2 on what is supply chain.
What we have seen in the earlier video is – I have said a supply chain story to you.
And basis that I’ve explained to you what is a supply chain.
So this is the supply chain model what we have discussed about. So in this video what we’re going to do is spend more time in understanding.
Who are the key stakeholders and what are all those specific activities they’re doing part of.
Supply Chain so let’s start with the demand planning if you see the story what happens here is the mother note down all the favorite dishes of her son for lunch and other details so what it would happen is that the mother will be just sitting with her son and then asking what are the things he needs but in reality…
If you’re having hundreds and thousands of customers it is practically impossible.
Meet with those thousands of customers and ask them what they want?
So that is where demand planning is done leveraging your history of your past sales what your sold in the past that is number #1
and #2 using the market research that is where the demand planning interacts with the current happenings in the market very closely to estimate what my sales would be.
#3 there would be a lot of usage in terms of forecasting tools to arrive at the demand forecast. so the demand forecast is the output from the demand planning which if you relate to the story is a list of what the son needs for lunch is typically the demand forecast. so once the demand forecast is given Supply planning is to knock down that requirement into the raw materials again in the example we talked about the mother plans for the ingredients to make the lunch similar way here to make that final product what are all the raw materials needed. So the ingredient is on the story The Right term in supply chain is all the raw material we just need to match demand what is being forecasted.
So that is the output of Supply planning to tell what are all the raw material I need. so once you have that.
The purchase order is sent to the supplier. So what a purchase order means the purchase order tells the supplier these are all the raw materials needed by when at the manufacturing facility this is what the purchase order will read. Production order will tell the exact date by which the finished product should be ready so that will trigger basically the start of production it’ll read by when you’re finished product should be ready so once these two orders are released i.e, the purchase order and production order released to the supplier and the manufacturer respectively. The supplier then basis the purchase order ships those raw materials to the manufacturer based on the date given on the purchase order as I have told you purcahse order will read the date by which the products are required at the manufacturing facility. Basis that the supplier will be shipping the raw material to the manufacturer now the raw materials are at the manufacturing facility now, basis the production order the manufacturer will start to convert the raw material into finished product
The right time to use is FG which is finished Goods Manufacturing facility is the place where the raw materials are converted into the finished product in the form and shape which is required by the…
customer. So in the example the ingredients are converted into lunch as required by the son in supply chain way of telling the raw materials are converted into finished goods by the manufacturer.
Okay so that is how the relevance comes in. so now the finished goods are ready. the retailer gives the sales order.
to the manufacturer and basis the sales order the products are then sent to the retailer that is called that the distribution so what the sales order will read the sales order will exactly tell when the finished product is required at the place of the retailer basis that the manufacturer will be shipping the product to retailer.
If you see here, again I have mentioned one more sales order which is from the customer to the Retailer so what customer is giving is also a sales order and basis that the retailer will then ship it to the customer In both these scenarios that is between customer to retailer and retailer to manufacturer there is a sale happening and where ever there is a sale happening you use the term ias sales order. So there are 3 different order we have seen and you have to very clear on this purchase order production order sales order I will explain one more time.
Purchase order will
Trigger the supplier to ship raw materials to the manufacturer to reach the manufacturer at the date said in the purchase order
The production order will trigger.
Production i.e., conversion of the raw material to the finished product basis the targeted date that is the date by which the finished goods has to be ready at a manufacturing facility and third one is a sales order; a sales order will trigger the shipment of the final product to retailer based on the date required by the retailer this completes the supply chain model so now you know who are the key stakeholders involved – they are the supplier manufacturer retailer and customer. and activities done by each of the stakeholders. what is the job of the supplier? receive the purchase order.
Ship the raw material as per the purchase order to the manufacturer what the manufacturers job? his activityis, based on the production order convert the raw material into the Finish Product.
And Manufacturing also what he does is
Receive the sales order from the retailer bases that ship the product to the retailer. Distribution takes care of movement of product from the manufacturer to the retailer and also from the retailer to the customer. so when ever the product is on wheels or any mode of transportation that comes under distribution basically moment of product right from manufacturer till delivery to the customer we called it as a distribution what is the job of a retailer?
Place orders to the manufacturer, receive and stock goods at the retailing outlets and receive sales order from the customer or understand that the requirement from the customer and then ship the product to the customer or have a place where customer comes and picks the productfrom the retailer. This explains the different activities that are happening within the supply chain model the last one I’m going to know explain what is the definition if you see all the video series the definition comes the last because that would be little theoretical but what is more important is your understanding of the concept so I will be always telling the definition in my own words derived from the concepts in the way I have explained to you so what is supply chain the definition goes like this supply chain is defined as a network of people.
process, system,
Information and infra involved in planning.
supply of of raw material conversion of raw material to finished goods and distribution of finished goods to the customer this is how you define a supply chain. I’m sure this is now a clear to you and you got answers for the three questions we talked about during the start of the video part 1. If you have any clarifications you can write back to me on the comment section in the video thank you so much I will meet you with an another video from SupplyChainWay.com thank you.
