Supply Chain Execution
Supply chain execution is the execution of supply chain planning. Essentially, supply chain execution puts the planning into motion and reflects the processes involved in improving the collaboration of all members of the supply chain suppliers, producers, distributors, and customers. Supply chain execution involves the management of three key elements of the supply chain: product flow, information flow, and financial flow.
- Product Flow
Product flow refers to the movement of goods from the supplier to production, from production to distribution, and from distribution to the consumer. Although products primarily “flow” in one direction, an effective SCM system will also support the activities associated with product returns. Effectively processing returns and customer refunds and recycling or properly disposing of products after the end of their life span are critical parts of supply chain execution. Thus, an SCM system should support not only the “downstream” forward logistics processes but also reverse logistics. Reverse logistics refers to the processes in place to efficiently receive products from the point of consumption. With an increasing need to recapture value by reusing or recycling materials, recovering these after use is an important aspect of managing product flows, and companies need to plan reverse logistics, where materials flow back from the consumer to the producer, so that valuable materials can be recycled, or hazardous materials can be properly disposed of. In case of receiving excessive or defective products, these processes also include shipping replacements or crediting customer accounts.
- Information Flow
Information flow refers to the movement of information along the supply chain, such as order processing and delivery status updates. Like the product flow, information can also flow up or down the supply chain as needed. The key element to the information flow is the complete removal of paper documents. Specifically, as all information about orders, fulfillment, billing, and consolidation is shared electronically, these paperless information flows save not only paperwork but also time and money. Additionally, because SCM systems use a central database to store data, all supply chain partners always have access to the most current data necessary for scheduling production, shipping orders, and so on
- Financial Flow
Financial flow refers primarily to the movement of financial assets throughout the supply chain. Financial flows also include information related to payment schedules, consignment and ownership of products and materials, and other relevant information. Linkages to electronic banking and financial institutions allow payments to automatically flow into the accounts of all members within the supply chain.
References:
Banker, S. (2016, April 6). A fresh look at supply chain visibility. Forbes. Retrieved May 11, 2016, from http://www.forbes.com/ sites/stevebanker/2016/04/07/a-fresh-look-at-supply-chain-visibility
Chopra, S., & Meindl, P. (2016). Supply chain management: Strat- egy, planning, and operation (6th ed.). Boston, MA: Pearson.