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STUDENTS' CORNER - 176

Effective Supply chain coordination keeps retailers and customers satisfied.

Supply chain coordination is also known as Channel coordination. The goal of this coordination is improving the performance of the business units involved.

Imagine that you are marketing a product; say a milk product, a sweet. Your business depends upon the number of customers who come to you for the sweet. It means, you must always have adequate number of pieces of sweet so that your customer does not return empty handed. Sending a customer unsatisfied has a serious impact, sooner or later, on your business.

 What must happen without fail to make you keep the sweet ready for sale?

First of all, the producer must send the sweets, so to say, to you in time in the required quantity. At your end, only one unit is involved, the unit that makes and markets the sweet. In the supply chain as for you there is only one unit. If that producer does not fail to send you what and how much you need, your supply chain functions in a good coordinated way.

Imagine you are a distributor and you get your consignment, the products you have ordered from a mega stockist from a far off place, say from Delhi. When you get the products from your distributor, how many stages the products have had to pass through to reach you, let us see.

First of all, your stockist in Delhi must get the products on time in the required quantity from the producer in his own place. From the producer, your products have moved to your stockist; then, from the stockist, they move to you. Say the products reach a warehouse in your place and from warehouse you get your products. So the supply chain can be like this: manufacturer to the mega stockist in Delhi; from the stockist to the warehouse in your place; from the warehouse, the products are transported to you.  If this supply chain is not disrupted the movement of the products through various stages is achieved smoothly, effectively. We have not gone into the Transport component of this supply chain.

This is called Supply Chain Coordination. Generally, this Chain functions effectively since everyone in this chain is a beneficiary.

In our next session, we shall see some of the issues related to the Supply Chain Coordination, particularly what is called Bullwhip Effect.