Supply Chain Management’s Three Levels

The administration of processes involved in the acquisition of raw materials, their transformation into completed items, and their distribution to the final consumer is known as supply chain management (SCM). SCM also includes actively simplifying a company’s supply-side operations to increase customer value and achieve a general competitive edge in the market. Institutes like SLMT, one of the best Logistics Institute in Kochi provides ample information regarding the same.

Examining the three levels of supply chain management—strategic, tactical, and operational—will help you better comprehend the many phases of supply chain management and how they affect one another. Together, these levels handle all the choices necessary to timely deliver high-quality goods to clients at the lowest possible cost while generating the most possible income.

  • Strategic Level

The company’s long-term decisions are made at the top level of supply chain management. The choices that are made here set the stage for the entire supply chain operation. Examples of decisions made at this level include choosing the goods or services the company will offer. To improve current products or add new ones to the product mix, this duty requires monitoring market trends and client feedback.

Making decisions on which suppliers to use for material purchases and where to locate the manufacturing processes go hand in hand with product development. Making judgements on selecting the best suppliers should take into account the overall goals and values of the business. If a firm wants to lessen its environmental effect and create a sustainable supply chain, it could choose a supplier based on their sustainable practices, which could result in higher costs for some commodities.

This degree of supply chain management is essential for creating a useful system that will integrate all divisions of the business and make sure that every choice made appropriately reflects the company’s overall objectives. This will guarantee that every link in the supply chain functions as a whole to deliver your products to customers and enable you to turn a profit.

  • Tactical Level

All of the supply chain’s short- and medium-term choices are made at the second level of supply chain management. The more specific processes are typically outlined at this level, even as the strategic level handles the broad and “big-picture” decisions. Here, production procedures will be established to guarantee that a high-quality product may be produced for the least amount of money.

Decisions made at the tactical level are crucial for reducing risks and regulating expenses. Here, achieving the best overall end value and meeting client demand are the main priorities.

The choice of whether to manage transportation, warehousing, and inventory logistics in-house or externally can also be chosen at this level. These choices may alter depending on location, transit costs, cost of land ownership, etc.

  • Operational Level

The most frequent form of supply chain management is this one. It is the location of daily operations, decision-making, and planning for the supply chain. When making operational-level decisions, businesses and manufacturing facilities sometimes overlook the tactical and strategic level.

Operational decision-makers must carefully weigh their options and make choices that are consistent with the overarching strategic and tactical choices that have been made. Operations managers must make hundreds of decisions every day to deal with everything unexpected that comes their way, even though higher-level decisions are made with the purpose of developing favourable procedures throughout the supply chain. The most effective choices are those made in the strategic and tactical framework.
Daily and weekly forecasting for resource and capacity planning, logistics monitoring to make sure that there is enough inventory on hand and that materials are accessible in time for production, are just a few elements of operational-level management. In the case that the manufacturing facility gets material that is regarded to be of low quality, which would impair the overall quality of the items being produced, other decisions include resolving damages or losses with suppliers.

Any industrial business must be aware of the three supply chain management levels. Logistics and Supply Chain Management Courses in Kerala are very helpful in understanding more about SCM.

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