February 26, 2019

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Supply chain flows

Supply chain flows

Supply chain flows

Introduction to Supply Chain Flows

Supply chain management is about managing the flow of materials and information through the manufacturing process, including raw materials, work in process and finished goods. SCM involves coordinating and integrating of all the activities which begins from procurement of materials to final delivery of goods to the customer. What are these flows which boost up the supply chain activities?

Types of Supply Chain Flows

The flows that boost up the supply chain activities are product flow, information flow, demand flow and finance flow.

Product Flow

Product flow refers to the movement of goods from a supplier to a customer, as well as any customer returns or service needs. It takes place within numerous wholesaling and retailing distribution channels, and includes such important decision areas as customer service, inventory control, materials handling, protective packaging, order procession, transportation, warehouse site selection, and warehousing.

Components of Product Flow

The physical movement of goods passes through several stages and dimensions of supply chain.  The inseparable components of product flow/physical distribution are: Order processing, Transportation, Warehousing, Material Handling, Inventory management & Control.

Order Processing

Order processing is a step by step process which covers: Verifying consumer credibility, Checking for any outstanding payment, Monitoring stock level, Preparing invoice and arranging transporter, Sending the consignment and information.


The selection of the transportation is based on Suitability or nature of product, Affordability, Availability, Customers Specifications, Competitor’s transportation mode.


The selection of warehouse is based on Availability of, water, labor, transportation, Space Available, Road facilities, Protection measures, lighting, ventilation etc., Govt. Rules and regulations.

Material Handling

It involves: Placing and positioning of materials to facilitate movement and storage,  Common equipments are conveyors, bucket elevators, hoists, lifts, cranes, forklifts, trolleys, dumpers, trailors, trucks.

Inventory Management & control

Inventory management refers to the efficient control over the stock of goods stored in the warehouse for the purpose of meeting customer demands in time.

Information Flow

Supply chain management is not just the flow of physical material but also the flow of information to various stakeholders such as the suppliers; procurement, finance and accounts departments of the organization concerned; and the end-user departments involved in using the material being supplied.

The structure of information flows are from Retailer to Headquarter and vice versa, From Distributor to Headquarter and vice versa, From Warehouse to Headquarter and vice versa, From Manufacturing to Headquarter and vice versa, From to Headquarter Transport administration and vice versa, From Supplier to Headquarter and vice versa, From Retailer to Distributor, From Manufacturing to distributor or retailer, From Supplier to transport administration and vice versa, From Distributor and Retailer to transport administration.

Demand Flow  

Demand flow represents the flow of demand from the consumer to the manufacturer. The demand flow process begins when the consumer inform the retailer regarding his intention to buy a product or to have a service. Retailer passes this demand to the wholesaler, and wholesaler to the manufacturer.

Finance Flow

Finance flow is nothing but the funds flow from the consumers to the manufacturer and from manufacturer to supplier. The financial flow in a typical supply chain includes thousands of invoices and payments in a given year.

Finance Flow may consist of Credit Terms, Payment Schedules, Consignment, Title ownership Arrangements

Financial flow can be divided into two: Cash inflow and Cash outflow where cash inflow of a company is simply the total money earned by that company and cash outflow is money that goes out of a business such as purchase of stock, raw materials or tools, wages, rents and daily operating expenses, dividend payments, income tax and other forms of tax, loan repayments and reduced overdraft facilities.  Cash inflow minus cash outflow will yield the take-home profit of a business.

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