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What is Supply Chain?
A supply chain is a linked set of resources and processes
that begins with the sourcing of raw material and extends
through to the delivery of end items to the final customer.
A supply chain is comprised of vendors, manufacturing
facilities, logistics providers, internal distribution centers,
distributors, wholesalers and all other entities that lead up to
final customer acceptance.
A simple analogy can help you to
conceptualize the basics of supply
chain and inventory management.
Everyday thousands of people come into contact with
inventory or participate in a supply chain in their
homes, at work and in their leisure time.
Most of the time they give very little thought to this
fact because the roles they play and the actions they
perform are so commonplace as to be virtually
transparent.
One does not have to look further than one's
own kitchen, ‘yes kitchen’ to see supply chain
and inventory management in practice.
Assuming your kitchen is already fitted and
equipped, people who use the kitchen to
prepare meals, buy in food from local stores,
and fresh produce markets, store the food until
they need to use it as an ingredient to a meal
and then replenish the store in order to have the
ingredients available to make the next meal.
At each of these phases the
principles of supply chain and
inventory management are in action.
If we use an ingredient, we have to go to our supplier and buy more. Often
we use the same suppliers, we visit them on a regular schedule that can be
measured in days, weeks or months depending on how much of the
ingredients stored are consumed in our meals.
Each time we deplete an ingredient
we add it to our 'shopping list.
On certain occasions we add or remove
items to and from our list in order to cater
for changing circumstances. This is called
inventory management, and our suppliers
are our supply chain. In this scenario, we
are our own end customers because we
manufacture and consume our own meals.
Every business is part of one or more
supply chains and has a role to play in
each of them. How a business plays its
role in the supply chain has a direct impact
on the efficiency of the business and the
supply of goods to the final customer.
Many businesses have an organic
approach to their supply chains and
inventory management practices.
Methods and practices employed are
generally the result of action taken early
in the business' life and rarely change
after they have been used successfully.
As circumstances change with time these
businesses rarely re-evaluate their supply
and inventory policies.
As circumstances change with time these
businesses rarely re-evaluate their supply
and inventory policies.
Often, this results in loss of business to
competitors who take a proactive stance toward
these matters and this could lead to the
business becoming non-viable despite strong
market demand.
A successful supply chain and inventory
management strategy should encompass
three characteristics:
1. Agility – the ability to respond quickly to
short-term change in the demand and
supply equation and manage external
disruptions more effectively.
A successful supply chain and inventory
management strategy should encompass
three characteristics:
1. Agility – the ability to respond quickly to
short-term change in the demand and
supply equation and manage external
disruptions more effectively.
2. Adaptability – the ability to adjust the
design of the supply chain to meet
structural shifts in markets, modify supply
network strategies, products, and
technologies.
A successful supply chain and inventory
management strategy should encompass
three characteristics:
1. Agility – the ability to respond quickly to
short-term change in the demand and
supply equation and manage external
disruptions more effectively.
2. Adaptability – the ability to adjust the
design of the supply chain to meet
structural shifts in markets, modify supply
network strategies, products, and
technologies.
3. Alignment – the ability to create shared
incentives that aligns the interests of
business across the supply chain.
Every business can avert this situation by
setting objectives and working toward
achieving them.
But what are the key objectives that a
business can focus on when evaluating
supply chain, inventory management and
optimization strategies?
The ultimate desired result of any change or
improvement should aid the business in achieving
some or all of the following:
Increased Customer Satisfaction
Lower Carrying Costs
Increased Revenue
Reduced Capital Expense
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A comprehensive guide, to the concepts,
techniques and technologies of SYSPRO
Supply Chain, inventory management and
optimization.
