To establish and maintain a supply chain, it is essential that all the different factors are assimilated and synchronized.
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Supply Chain Management (SCM) involves the following three levels:
- Strategic Level
- Tactical Level
- Operational Level
It is important to create a productive supply chain that will work on all three levels. Beginning with strategic planning and ending with the management of daily operational tasks, the effectiveness at each of these levels ensures a smooth and highly efficient supply chain.
Strategic Level
At the strategic level, planning is done where the entire groundwork of how the supply chain will work is carried out. Data from various sources is taken and decisions are made keeping in mind the long-term goals of the company. When strategic planning is conducted, every major factor affecting the supply chain such as consumers, suppliers, transportation, company goals, resources, etc. are analyzed, and its use and value determined.
At the strategic level, issues that are discussed include:
- Choosing the resources
- Calculating costs
- Establishing customer demand
- Product management
- Carrying out innovations and experiments to meet customer demand
- Finding methods to make the chain more effective
Strategic level is a vital level of Supply Chain Management, as creating an effective strategic plan ensures the success of the other two levels.
Tactical Level
After the broader planning where long-term suitability of operations is carried out, at the tactical level, planning on how the short-term goals must be met is done. The short-term goals may include:
- Finding new suppliers or engaging with older ones better
- Gathering of the required materials and human resources
- Creating schedules for suppliers and employees
- Ensuring transportation needs are met
- Developing methods to synchronize supply and demand better
- Looking at warehousing facilities
At this level, the decisions that are made impact the cost and the effectiveness of the supply chain. As the decisions regarding the day-to-day operational activities are taken, the role of factual information, experience of the planners and innovation becomes important.
Operational Level
At this level, the decisions taken are implemented and the day-to-day operations are managed to fulfill the goals determined during the first two steps. At the operational level, planning, analysis and changes are conducted to keep the supply chain optimized. It needs to be remembered that success at this level heavily depends upon the other two levels. Without effective planning for both long and short-term, operations on a daily basis cannot be improved to reach maximum productivity.
The operational level involves the following activities:
- Ensuring that supply is consistent and the demand is met
- Keeping an account of progress, materials and human resources
- Managing materials, operations and human resources
- Making sure that waste is reduced/removed
When all three levels are given equal importance, a supply chain can be optimized, demand met every time and costs reduced. Avoiding the first, the second, or the first two levels may lead to the inability to meet demand, widening the difference between company goals and operations, an increase in cost due to waste and ineffectiveness, and lack of productivity. Therefore, companies must invest in the strategic and tactical level before moving to the operational level.
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All public Supply Chain Management courses include am/pm tea, lunch, printed courseware and a certificate of completion. Customized courses are available upon request, so please contact pdtraining on 855 334 6700 to learn more.