We have vast numbers of Small and Medium Enterprises (SME) in any given economy but their impact in national economic development is relatively low due to low operational efficiency. Implementation of Supply Chain Management system in SME will reduce operational cost and increase efficiency.
Implementing an effective Supply Chain Management system in SME has an important role to play in order to ensure economy growth and development. The bottlenecks experienced by SME needs to be identified and eliminated in order to enable them to develop. Supply Chain Management is the process of integrating all the components of production and supply processes. It is the management of the flow of goods and services as required by the final consumer.
Application of the below models will help in eliminating the challenges facing efficiency and effectiveness of a Supply Chain Management system in SME. Firstly, the Product and Consumer integration while the Second, Production and Supply integration.
The Product and Consumer integration: it describes how best the activities involved in delivery of the right quantity of products, with the required specification at the prescribed time gets to the consumer in the right condition. Here is how to get started.
Firstly, for a start-up or existing business Research and Development (R&D) is necessary for identification of products needs in the consumer market. This will give a view of products trends in the new and existing market and allow SME’s to quickly understand what the market needs. This stage is very imperative, as it will assure SME’s that the goods being produced will move in the market.
Furthermore, identification of products needs in accordance to the market request. Once the specification is well-defined it will be communicated to other sections in the value chain system. And this will ensure production is in line with the exact quality of product required by the market.
Thirdly, a market survey needs to be carried out to ensure the volume in projected production is what the capacity of the market can consume at every point in time. This survey will enable high inventory turnover, which will ensure quantity produced is what the market can consume at every point in time.
The Production and Supply integration: it describes how best the activities involved in production starting from procurement of raw materials to the point of supply. Below are the necessary steps in achieving the bottom line.
Firstly, the identification and detailed definitions of items and quantities that needed to be produced. Goods must be in line with the agreed specifications of the market request. The bottom-line is to have the required quality of materials, as any flop in this stage will affect the entire value chain.
Secondly, procurement of materials must be in accordance to the production plan and scheduling. More so, storage condition and shelf life of each material has to be considered in purchasing and storing of materials.
Furthermore, the issuance of raw materials has to be done in line with the required components that are needed to make the intended specification of the finished product. An Enterprise Resource Planning technique will be deployed to manage inflow and outflow of raw materials.
Finally, the production of goods, this is the most critical point in the value chain. Any flop that occurs here will affect the bottom-line. Production processes, policies and procedures will be design to ensure time management and quality production.
In summary, application of the above measures in operations will bring about success in the bottom line. The effective management processes will balance the need of the customer with the supply of the said products or services without waste in the system.