The supply chain model is considered a system of many organizations, people, activities, information and resources, coordinated to bring products from "input" to "output". In this article, let's learn more about the nature and optimization of supply chain with Bizzi. business operating costs when applying supply chain models.
What is supply chain and supply chain model?
Supply chain can be simply understood as the entire process of turning raw materials into finished products/services, and delivering them to the final consumer.
Concept and characteristics of supply chain
The supply chain includes all the steps involved in delivering a complete product/service to a customer, from sourcing raw materials, transforming to manufacturing, transporting finished products to distribution points, and delivering to the consumer.
It is a system that links organizations, people, activities, information and resources involved in the production, marketing and distribution of products from raw materials to the final customer. Key activities include raw material procurement, manufacturing, packaging, transportation, storage and distribution, often involving multiple partners such as suppliers, manufacturers, distributors, retailers and customers.
Concept and characteristics of supply chain model
A supply chain model is a theoretical or practical framework that describes how organizations and businesses manage their supply chains. It helps make supply chain management more orderly and logical, providing an overview to monitor and motivate teams to achieve business goals.
This model addresses core issues such as: products to be produced, market identification, supplier selection, factory location, inventory management, transportation and distribution.
The Importance of Building an Effective Supply Chain Model
A well-designed supply chain model offers many strategic benefits:
- Ensure resources and information: Efficiently deliver and coordinate materials, information and services from origin to end consumer.
- Boost business and increase revenue: Improve operational efficiency, expand market share and create jobs.
- Cost optimization: Reduce inventory from 30% to 70% through efficient management.
- Improve competitiveness: Better meet market needs, ensure quality and manage risks.
- Enhanced interaction: Improve relationships between partners in the chain.
Key components and stages in a supply chain model
Below are the main components and stages in a standard supply chain, giving you an overview of how goods and services are created and reach consumers:
Main ingredients
The supply chain includes many elements and partners:
- Partner: Raw material suppliers, manufacturers, distributors, retailers, consumers.
- Support Services: Logistics service providers (transportation, warehousing, delivery, packaging, insurance), financial service providers (payments, credit, insurance).
- Work: Inventory, transportation, warehousing, purchasing, customer service, information technology.
Basic stages in the supply chain model (according to the SCOR model)
The SCOR (Supply Chain Operations Reference) model divides the supply chain into four main stages:
- Plan: Determine overall strategy, forecast demand, price products and manage inventory.
- Source: Manage supply, search, select and negotiate with suppliers.
- Make: Transform raw materials into products, manage quality and operations.
- Delivery: Manage shipping, storage, packaging and distribution of products to customers, including order management and returns processing.
10 popular supply chain models
Choosing a supply chain model needs to be consistent with the structure, goals and development orientation of the business.
- Continuous Flow Model: Optimize the flow of goods, reduce costs and time. Suitable for goods with stable demand and little change.
- Quick Response Model: Respond quickly and flexibly to customer needs. Suitable for trending goods or fast-changing markets (e.g. cosmetics, fashion).
- Agile model: Respond flexibly to changes, meet customer needs quickly and effectively. Suitable for highly competitive environments, unpredictable needs.
- Flexible Model: Adapts to seasonal or fluctuating demand. Able to start and stop production easily, meeting high demand volumes.
- Cost-Optimized Model: Focus on cost reduction and operational efficiency, emphasizing lean methodology. Suitable for industries with stable demand and high price competition.
- Customized Response Model: Allows for customization of supply chain operations and processes to fit specific customer needs (e.g. automotive, furniture). Higher cost, greater value.
- Lean model: Reduce costs, limit waste, ensure efficiency by eliminating non-value-added steps. Ideal for stable markets.
- SCOR (Supply Chain Operations Reference) model: A standard operating reference framework that provides a comprehensive view and standardized metrics for measuring and analyzing supply chain performance.
- PDCA model (Plan – Do – Check – Act): Continuous improvement tool, helps solve problems using a 4-step cycle: Plan, Do, Evaluate, Improve.
- Six Sigma Model (6 Sigma): Focus on improving process quality to eliminate errors at the source, using real-world data to predict and minimize errors.
How to apply technology in building effective supply chain models?
Applying technology to the supply chain helps increase speed - reduce costs - enhance transparency and flexibility, especially in the context of market fluctuations and strong digitalization trends.
Characteristics of an effective supply chain
An efficient supply chain should have the following characteristics:
- Align with business strategy and goals.
- Meet customer needs.
- Suitable for market position.
- Adapt quickly to change.
Effective supply chain building plan
To build an effective supply chain, businesses need to:
- Inventory optimization.
- Build trusted partnerships.
- Use information technology.
- Ensure synchronization and communication.
- Continuous improvement.
Supply Chain and Industry 4.0 Revolution
Industry 4.0 with technologies like AI, machine learning, IoT, automation is changing the way production and distribution are done. Supply chain management today uses technology to become smarter, focusing on responsiveness and customer experience.
The role of ERP software in supply chain management
ERP (Enterprise Resource Planning) is an integrated system that manages core business processes, including the supply chain. The goal is to optimize and align logistics and supply chain processes. The Supply Chain Management (SCM) module in ERP oversees the entire supply chain, managing inventory, logistics, warehousing, and order fulfillment, automating processes such as collaboration, planning, coordination, and execution.
Bizzi and its role in supply chain cost optimization
Bizzi.vn is a specialized financial automation platform that primarily supports financial back-office operations. While not a comprehensive SCM or ERP system, Bizzi.vn's features can significantly contribute to cost optimization and financial management in a supply chain context, particularly through its ability to Integration with ERP systems available
- Invoice Processing:
- Automate input invoice processing with RPA and AI, reducing errors and processing time for procurement of raw materials and services.
- Automatically reconcile invoices – PO – GR in real time, optimize purchasing costs and maintain better relationships with suppliers.
- Business Expense Management (Bizzi Expense):
- Set up and monitor budgets by department/project, control actual spending against budget in real time.
- Automated expense approval system helps speed up the expense request approval process.
- Tightly control costs incurred during supply chain operations (e.g. transportation, warehousing, operating costs), helping to reduce waste and optimize budgets.
- Accounts Receivable Management (ARM):
- Automatic debt reminders and debt metrics tracking.
- Effective debt management can impact the cash flow of distribution or retail partners, thereby indirectly supporting financial stability and the flow of goods throughout the system.
- ERP Integration:
- Seamless integration with leading ERP systems (Oracle NetSuite, SAP, Microsoft Dynamics 365 Finance, Odoo).
- Allows financial data to be automated and synchronized with broader SCM processes within ERP, providing a more comprehensive and accurate view of supply chain-related costs. Bizzi.vn serves as a complementary solution to enhance the efficiency of specific financial processes within an existing ERP framework.
- Financing:
- Helping businesses access capital through supply chain finance and working capital financing options.
- Providing the necessary funds to pay orders or invoices to suppliers, helping to maintain continuity in supply chain procurement and production operations, especially useful for small and medium-sized enterprises to expand their business.
- Automated Order Processing:
- Basic feature to speed up sales by automatically processing orders from customers.
- Streamline the first step in the order fulfillment process, helping speed the movement of goods and information through the supply chain.
Bizzi integrates and leverages the power of automation without affecting the way your business operates
Conclude
Each supply chain model Each model has its own advantages and disadvantages, suitable for different characteristics, scales and goals of the business. Choosing the right model and applying technology effectively is the key to optimizing production processes, managing costs and meeting customer needs.
Bizzi.vn With financial automation features and ERP integration capabilities, it serves as a powerful complementary solution, helping businesses tightly control costs and improve cash flow across the entire supply chain. This is especially useful for companies that want to improve back-office financial efficiency without replacing their overall management system.
To get advice on suitable solutions as well as experience Bizzi's features, register to make an appointment here: https://bizzi.vn/dat-lich-demo/
