Supply chain!? Networks? Downstream? How hard is managing all this?
Entrepreneurs, this is for you!
Here we are with the first of the series about various aspects of supply chain in the complex digital world of today.
In this initial post, we’ll review what exactly supply chain is, its management, its key players, and the need for tracking both money and materials as they travel across the supply chain. Moving forward, we will look at other aspects of this topic, such as financing, innovation, and unlocking value.
What is supply chain?
A supply chain is a network of facilities and distribution options that performs the three primary functions of procurement of raw materials, transformation of these materials into products, and distribution of these products to customers.
Sounds simple, right? Managing the process isn’t that easy though. Let’s dig deeper into the key terms.
“Upstream” and “downstream” are in general, the key players with reference to an industry’s position in the supply chain. The closer to the target audience, an organization is, the further downstream it is said to be. Procurement of raw materials and production are elements of the supply chain considered to be upstream.
Elements of the supply chain
A supply chain network basically has three elements, supply, manufacturing, and distribution:
1. The supply side focuses on how, where from, and when crude materials are procured and provided to manufacturing.
2. The manufacturing stages process these crude materials into completed items
3. The distribution side guarantees that these completed items reach the end customers through a system of distributors, warehouses, and retailers.
The chain can be said to start with the suppliers of your suppliers and ends with the customers of your customer.
An essential for entrepreneurs. Really?
Supply chains are not a new concept. Entrepreneurs have been purchasing things from providers and pitching items to customers for almost as long as people have inhabited the earth.
Be that as it may, the principles of effective supply chain management are fairly new. The essential standards of Supply Chain Management (SCM) started to come to fruition in the 1980s, at about the same time that computers came onto the business scene.
Supply chain management (SCM) 101
SCM is the arrangement and coordination of the people, procedures, and technology engaged with building value for an organization. Successfully dealing with an inventory network includes planning around both all the work in your organization as well as in the external networks in the supply chain. It implies viewing your business as a node connected within a long, end-to-end chain overall providing something of worth to a customer.
So, is it that hard to manage supply chain networks?
Ironically, many techniques and measurements that organizations have depended on in the past, and that practitioners have been instructed to utilize, can really drive inefficient practices when looked at from a supply chain perspective.
For instance, your business rep may hit her targets via a huge deal from a client, yet the arrangement may be unprofitable for the organization due to the associated costs for coordination and assembly. So, the effort you spend on deals, coordination, assembly, procurement, and all other functions should be adjusted to guarantee that the business you’re seeking after would be profitable.
At the end of the day, profitability is just a measure of the excess value that you have reaped from your supply chain.
What does an effective supply chain look like?
When your organization works superbly in dealing with your supply chain network, you are better placed to exploit value creation openings that your rivals may miss.
● By actualizing lean assembling, you can lessen inventories.
● By being genuinely sensitive to downstream needs, you can develop more grounded associations with your clients and develop deals better.
● By working together intimately with your providers, your organization can gain easier procurement of the materials it requires, when it’s needed, and at a reasonable expense.
In many organizations today, over 70 percent of the expenses and 100 percent of the income is subject to how the inventory network is overseen. So, keeping the majority of the parts of your supply chain network well-adjusted is vital to maintaining your business effectively. And that’s the reason supply chain management has turned out to be so critical, so rapidly.
Transforming supply chain systems through digitization
The new age is in. With IoT to digitally enable the supply chain, there are unprecedented opportunities for solutions that combine digital and physical products and services. These will have higher impact and enable hyper-flexibility for businesses and supply chains.
A sample of current innovation drivers include
● The need for instant service
● Increasing government regulations
● Data- the key to target audiences
● Omnichannel expectations
● And the ever-growing talent gap
With connected devices, supply chains will have transparency on customers, products, locations and assets. Unlike previous generations of passive elements, digitization will allow a supply chain to control and monitor the external environment and execute decisions almost independently.
Thanks to the age of digital transformation, we are witnessing innovation in the areas of
● Same-day delivery
● Real-time visibility across value chains
● Predictive analytics
● Self-guided/driven vehicles
● 3D printing
● Green supply chains
● And fully integrated forms of commerce
Supply Chain Essentials in a nutshell…
The way you manage your supply chain connection has a direct bearing on your business performance in terms of cost, capital requirements, customer service perception, speed to market, and other factors that influence your edge in the marketplace.
…and what’s Next?
Here at Arteria Technologies, we have developed FinessArt – a strategic platform that extends business processes beyond the four walls of an enterprise to its suppliers, transporters, sub-contractors, warehouses, sales teams, and multi-tier distribution network.
With its comprehensive business-to-business collaboration infrastructure, FinessArt can help you increase your productivity and/or profitability through unlocking value out of your supply chain of customers, partners, and agents.
In future posts, we will delve deeper into several other aspects of the supply chain and how FinessArt can help you leverage the power of a digitally enabled supply chain.