People often talk about supply chain strategies to cope-up with the ever-changing trends

and expectations of market. Sometimes, we are so carried away in strategizing that we

ignore the operational level processes involved in a supply chain, which results in
unexpected inefficiencies in the system. Hence, it becomes paramount for a supply chain
professional, who is fresh in corporate world, to have at least a broad overview of different
supply chain processes, which will further help him in aligning any supply strategy in a
better fashion.
eeping this in mind, this paper focuses upon broad processes of supply chain inside a
manufacturing facility. !he overall processes involved in any end-to-end supply chain, i.e.,
right from supplier to customer are numerous as well as complex, for the sake of brevity,
and to make this paper less cumbersome for the readers, " have considered supply chain
processes inside a manufacturing facility only.
Assumptions
#. $ompany has an %&P system.
'. $ompany follows ()ake to *rder( strategy, i.e., goods are manufactured when purchase
order is received from customer.
Supply chain process inside a manufacturing company starts from receiving a customer
purchase order, subse+uently re+uisite raw material in desired +uantity is arranged as per
the production plan of manufacturing, after which it is packed and dispatched.
,ollowing is a broad flow chart of supply chain inside a manufacturing facility- -
1). Customer Purchase Order Input in ERP System- *nce the sales department gets
the customer purchase order, they verify if prices, payment terms, specification of the
product are as per the prior agreement with the customer. "f everything is *, then these
details are entered in %&P system, which further becomes an input to production planning
department as what is to be made and in what +uantity. .ased on this input, production
planning department does the raw material planning.
%ntering customer purchase order in %&P is a very critical process/ since any wrong input
at this stage will lead to erroneous information to production planning department, as a
result erroneous raw material planning will happen resulting in procurement of raw
material, which is actually not re+uired, and due to this, inventory will start piling up,
which is actually not re+uired.
0t the same time, due to wrong input in this process, right material will not be procured/
hence, manufacturing will not be able to produce the finished product as a result
dispatches will not happen which will further worsen the relationship with customer.
2). MRP: )aterial &e+uirement Planning is done based on the $ustomer Purchase *rder
entered by sales department in %&P system.
"n this process, .ill of )aterial of the products for which planning is to be done is exploded
to identify which raw material is re+uired.
1et +uantity of raw material to be procured is calculated after considering raw material
2stock in hand 3 raw material +uantity on order4.
3). Reease o! Purchase Re"uisitions- .ased on calculation during )&P, purchase
re+uisitions are released by production planning department containing the details of part
number, +uantity to be procured and the dates at which a particular raw material is
re+uired in factory.
!he purchase re+uisitions released are for further action for procurement department.
#). Reease o! Purchase Orders on $endors- .ased on the purchase re+uisitions
released, procurement department sends &,5 2&e+uest ,or 5uotation4 to the relevant
vendors. !he responses of &,5 are compiled, negotiated with vendors are done and best
offers are identified. Subse+uently, purchase orders are placed on vendors.
%). Ra& Materia Recei'ed in (actory- !hough this process seems to be mundane, but
it6s an important process. "t is at this point that the raw material is inspected for +uality
and observed whether it is meeting the desired specifications. "f this process is not
followed strictly, then inferior +uality raw material will get in factory which will hamper the
+uality of finished product.
0lso a uni+ue storage location is assigned to raw material, which enables easy
identification and retrieval of raw material.
)). Manu!acturin*- "mportant thing is to manufacture the product as per the
specifications but also important is to manufacture the product at the time when it is
re+uired. Hence, manufacturing needs a close coordination with production planning
department to make sure that the product manufacturing date meets the date as per
production plan.
+) ,ispatch- 0fter the goods are manufactured, they are inspected packed and
dispatched. 7uring dispatch it should be ensured that invoicing of finished product is
happening as per the taxes and duties as agreed with customers. 0lso it is to ensured that
all relevant document e.g. - &oad permit accompanies the shipment.
!hough the above processes are fairly simple to understand and follow but there are lot
many operational issues which arise during executing these processes. !hese issues will
vary from organization to organization. !o have a holistic view of an organization6s supply
function one has to deeply go through these processes and then only he will able to gauge
what actually it re+uire for a supply chain to deliver the bes