What is Supply Chain?
Supply Chain is a field of study that looks at managing the flow of goods and services from the point of origin to the point of use. It spans all business sectors, so supply chains are found in anything from agriculture to high-tech manufacturing to retailing. Understanding this subject means understanding what companies do with their businesses’ resources, so it’s an essential part of any management course or degree program.
In business, a supply chain is a system of organizations that manages the order and timing of goods and services from supplier to manufacturer to wholesaler to retailer. The results of these complex systems are reduced costs for consumers and improved efficiency. In the United States, there are more than three million suppliers in the supply chain, or about 20% of all U.S. businesses.
The key to identifying the characteristics of a good supply chain is the identification of the flow of information across all its parts. The five main dimensions are process flow, knowledge flow, physical flow, financial flow and people flow.
Parts of a Supply Chain
A supply chain consists of at least two parts. The first part is the process or production path through which the products are produced. This part typically begins with raw materials movement one step at a time through production facilities to manufacturing plants where components are made into finished products that are then delivered to retailers or end users. Many products go through multiple steps in their journey from producer to customer, sometimes including warehousing or product distribution along the way.
The second part of the supply chain is the flow of goods or services from their point of origin to their final destination. This part of the supply chain typically begins with producers supplying raw materials to manufacturers and assembly plants, and continues on through distribution warehouses and end users.
Supply Chain Management
Supply chains can be managed electronically with computerized networks and systems such as SAP (formerly called “Lotus”), which enables the integration of systems and communications into a single entity, or by using manual methods that can include distribution maps, batch/lot count sheets, invoice data management systems (IDMS), master data management (MDM) systems, customer master files (CMF), production planning applications (PPAs) and others.
The supply chain is managed by a supply chain management (SCM) department, which connects the internal activities of the firm with its suppliers and customers. There are two main types of systems that manage internal information regarding supply chains: production planning and demand planning. Production planning includes the following elements: materials requirements planning (MRP), capacity requirements planning (CRP), aggregate production scheduling, and finished goods inventory control. Demand planing includes the following elements: sales and operations planning (S&OP) and distribution channel analysis.
This type of strategy has been adopted by thousands of large and small firms since the 1990s, especially in manufacturing and distribution. One example is Wal-Mart’s adoption of advanced supply chain techniques to develop an efficient worldwide distribution system. Supply chains are also referred to as “supply networks”, “value chains”, or “value webs.” The latter term emphasizes the cooperative nature of these systems.
Supply chains often create logistic costs such as warehousing, transportation costs, processing costs, and inventory carrying costs decreased by improved information systems supporting improved transit times and end-to-end transparency reducing redundant inventories and creating implicit understanding across business partners in the network.
In addition to electronic and computerized systems, supply chains requires important manual methods such as distribution maps and batch count sheets. However, management of these complex systems face challenges leading to the introduction of several metaheuristics to handle the complexity of supply chain planning. These techniques are represented into two major categories: graph expansion approaches and branch and bound techniques. regardless of the presence of technological tools to aid Supply Chains, Experts are still needed to set up complex computer tools and properly organize the manual aspects of the chain. Fintalent Freelance Supply Chain Consultants are available around the clock to help businesses with these important task.
