Operations and Supply Chain Management - Drivers of Supply Chain Management

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Effective supply chain management is the result of a combination of choices involving a number of underlying variables or drivers. Decisions affecting any of these drivers have an impact on the supply chain, its effectiveness, and its alignment with the company's overall goals.
Supply Chain Management Drivers
There are five main drivers of supply chain management: production, inventory, location, transportation, and information.
Production
Production is the creation and storage of a product. It's an important factor in supply chain management because it determines how long it'll take for a product to be created and helps businesses to determine their timelines.
Inventory
Inventory comprises finished goods and in-progress materials held by a company or supplier. Having a good sense of inventory helps companies plan their production requirements and meet customer demand quickly and effectively. Inventory is relevant to all aspects of the supply chain.
Location
Location refers to where the supply chain facilities are. The selection of a location is influenced by several factors. These include the availability of raw materials, a skilled workforce, and the required infrastructure. Other factors include location of markets and customers, local tax policies and incentives, and an organization's own strategic preferences.
Choosing the right location enables companies to create efficient and cost-effective strategies for creating and delivering products to their customers.
Transportation
Transportation is the act of moving a product from one location to another. The form of transportation a company uses is an important consideration. It can determine costs of shipping. This can either help companies to save money or cause them to lose money, depending on their decisions.
Information
Information implies knowledge gained in order to make decisions. Information is the vital link between all of the drivers. It allows companies to make educated decisions concerning all relevant areas of business. Information assists in the coordination of business functions, as well as in the early stages involved in planning.

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