5 Components of Supply Chain management

1. Plan: Strategic planning has to be done to help companies manage all resources that move
towards achieving customers' demand for products and services. It also allows companies to
accurately forecast the demand for their products. This ensures that they do not overproduce or
under produce and allows them to earn more revenue. If the company does not plan properly
and ends up overproducing, they will have more inventory than needed. The inventories which
are not sold would have been a large loss in profits for the company.
2. Procurement: Companies source and choose suppliers to deliver the products and services
they need to create their product. It also involves the management of the inventory of goods
and services received from the suppliers and monitors shipments, verifying them, transferring
them to the manufacturing facilities and authorizing supplier payments, as well as
benchmarking against competitors to ensure the implementation of the best policies.
3. Make: This is the manufacturing step, where activities needed for production; testing,
packaging and preparation for delivery have to be scheduled. This is a critical part of supply
chain, where companies are able to measure quality levels, production output and worker
productivity.
4. Deliver: This is where the parties move products from one place to another. This is done by
coordinating the receipt of orders from customers, develop a network of warehouses, pick
carriers to get products to customers and set up an invoicing system to receive payments.
Delivery is also referred to as logistics, whereby it implements and controls the forward and
reverse flow and storage of goods, services and information between suppliers and consumers,
thus ensuring that the demand of the consumers are met.
5. Return: This is also referred to as reverse logistics (Upstream flow). Return often gives
problems to companies. This is where supply chain planners have to create a flexible network
for receiving defective and excess products back from customers and supporting customers who
have problems with delivered products.