The Four Flows Of the Supply Chain

THE PRODUCT FLOW :

Product Flow includes movement of products from supplier to consumer (internal yet as external), furthermore as managing customer service needs like input materials or consumables or services like housekeeping. Product flow also involves returns/rejections (Reverse Flow).

In a typical industry situation, there'll a supplier, manufacturer, distributor, wholesaler, retailer, and consumer. the buyer may even be an inside customer within the same organization. as an example in a very fabrication shop, many varieties of raw steel are fabricated into different building components in cutting, general machining, welding centers so are assembled to order on a flatbed for shipment to a customer. Flow in such a plant is from one process/assembly section to the opposite having a relationship as a supplier and consumer (internal). The acquisition is happening at each stage from the previous stage along with the whole flow within the supply chain.

In the supply chain, the products and services generally flow downstream (forward) from the source or point of origin to the consumer or point of consumption. there's also a backward (or upstream) flow of materials, mainly related to product returns.

THE FINANCIAL FLOWS:

The financial and economic aspects of supply chain management (SCM) shall be considered from two perspectives. First, from the price and investment perspective, and the second aspect supported by the flow of funds. Costs and investments add on as moving forward within the supply chain. The optimization of total supply chain cost, therefore, contributes directly (and often very significantly) to overall profitability. Similarly, optimization of supply chain investment contributes to the optimization of return on the capital employed in a very company. in an exceedingly supply chain, from the final word consumer of the merchandise back off through the chain, there'll be a flow of funds. Financial funds (Revenues) flow from the final consumer, who is typically the sole source of “real” money in a supply chain, back through the opposite links in the chain (typically retailers, distributors, processors, and suppliers).

In any organization, the provision chain has both Accounts Payable (A/P) and assets (A/R) activities and includes payment schedules, credit, and extra financial arrangements – and funds flow in opposite directions: receivables (funds inflow) and payables (funds outflow). The assets cycle also provides a useful representation of economic flows in an exceedingly supply chain. Great opportunities and challenges, therefore, lie ahead in managing financial flows in supply chains. The integrated management of this flow may be a key SCM activity, and one which includes a direct impact on the income position and profitability of the corporate.

THE INFORMATION FLOW :

Supply chain management involves an excellent deal of diverse information–bills of materials, product data, descriptions and pricing, inventory levels, customer and order information, delivery schedules, supplier and distributor information, delivery status, commercial documents, the title of products, current income and financial information, etc.–and it can require plenty of communication and coordination with suppliers, transportation vendors, subcontractors, and other parties. Information flows within the supply chain are bidirectional. Faster and better information flow enhances Supply Chain effectiveness and data Technology (IT) greatly transformed the performance.

THE VALUE FLOW (Product Flow):

A supply chain includes a series of useful creating processes spanning over the entire chain so as to supply added value to the tip consumer. At each stage, there are physical flows referring to production, distribution; while at each stage, there's some additional useful to the products or services. Even at the retailer stage though the merchandise doesn’t get transformed or altered, he's providing value-added services like making the merchandise available at a convenient place in small lots.

These may be spoken of as value chains because the product moves from one point to a different one, it gains value. a worth chain may be a series of interconnected activities which are required to bring a product or service from conception, through the various phases of production (involving a mix of physical transformation and therefore the input of varied product services), delivery to final customers, and final disposal after use. that's supply chain is closely interwoven with the value chain. Thus value chain and provide chain are complimenting and supplementing one another. In practice supply chain with value flow are more complex involving over one chain and these channels is quite one originating supply point and final point of consumption.

In chain at each such activity, there are costs, revenues, and asset values are assigned. Either through controlling/regulating cost drivers better than before or better than competitors or by reconfiguring the worth chain, sustainable competitive advantage is achieved.