A supply chain is a system of organizations, people, activities, information, and resources involved in
moving a product or service from supplier to customer. Supply chain activities involve the transformation of , , and components into a finished product that is delivered to the end user. In sophisticated supply chain , used products may re-enter the supply chain at any point where residual value is recyclable. Supply chains link .
A typical supply chain begins with the ecological, biological, and political regulation of natural resources, followed by the human extraction of raw material, and includes several production links (e.g., component construction, assembly, and merging) before moving on to several layers of storage facilities of ever-decreasing size and increasingly remote geographical locations, and finally reaching the consumer.
Many of the exchanges encountered in the supply chain are therefore between different companies that seek to maximize their revenue within their sphere of interest, but may have little or no knowledge or interest in the remaining players in the supply chain. More recently, the loosely coupled, self-organizing network of businesses that cooperates to provide product and service offerings has been called the extended enterprise.
As part of their efforts to demonstrate ethical practices, many large companies and global are integrating codes of conduct and guidelines into their corporate cultures and management systems. Through these, are making demands on their suppliers (facilities, farms, subcontracted services such as cleaning, canteen, security etc.) and verifying, through social , that they are complying with the Requirement. A lack of transparency in the supply chain is known as mystification, which bars consumers from the knowledge of where their purchases originated and can enable socially irresponsible practices. Supply Chain Managers are under constant scrutiny to secure the best pricing for their resources, which becomes a difficult task when faced with the inherent lack of transparency. Cost benchmarking is one effective method for identifying competitive pricing within the industry. This gives Negotiation a solid basis to form their strategy on and drive overall spend down.
The Global Supply Chain Forum has introduced another supply chain model. This framework is built on eight key business processes that are both cross-functional and cross-firm in nature. Each process is managed by a cross-functional team including representatives from logistics, production, purchasing, finance, marketing, and research and development. While each process interfaces with key customers and suppliers, the processes of customer relationship management and supplier relationship management form the critical linkages in the supply chain.
The American Productivity and Quality Center (APQC) Process Classification Framework (PCF) SM is a high-level, industry-neutral enterprise process model that allows organizations to see their business processes from a cross-industry viewpoint. The PCF was developed by APQC and its member organizations as an open standard to facilitate improvement through process management and benchmarking, regardless of industry, size, or geography. The PCF organizes operating and management processes into 12 enterprise-level categories, including process groups, and over 1,000 processes and associated activities.
In the developing country public health setting, John Snow, Inc. has developed the JSI Framework for Integrated Supply Chain Management in Public Health, which draws from commercial sector best practices to solve problems in public health supply chains.
If all relevant information is accessible to any relevant company, every company in the supply chain has the ability to help optimize the entire supply chain rather than to sub-optimize based on a local interest. This will lead to better-planned overall production and distribution, which can cut costs and give a more attractive final product, leading to better sales and better overall results for the companies involved. This is one form of vertical integration.
Incorporating SCM successfully leads to a new kind of competition on the global market, where competition is no longer of the company-versus-company form but rather takes on a supply-chain-versus-supply-chain form.
inventory, and labor. In theory, a supply chain seeks to match demand with supply and do so with the minimal inventory. Various aspects of optimizing the supply chain include liaising with suppliers to eliminate bottlenecks; sourcing strategically to strike a balance between lowest material cost and transportation, implementing just-in-time techniques to optimize manufacturing flow; maintaining the right mix and location of factories and warehouses to serve customer markets; and using location allocation, vehicle routing analysis, dynamic programming, and traditional logistics optimization to maximize the efficiency of distribution.
The term "logistics" applies to activities within one company or organization involving product distribution, whereas "supply chain" additionally encompasses manufacturing and procurement, and therefore has a much broader focus as it involves multiple enterprises (including suppliers, manufacturers, and retailers) working together to meet a customer need for a product or service.
Starting in the 1990s, several companies chose to outsource the logistics aspect of supply chain management by partnering with a third-party logistics provider (3PL). Companies also outsource production to contract manufacturers. Selecting a Third Party Logistics (3PL) Provider Martin Murray, about.com Technology companies have risen to meet the demand to help manage these complex systems.
There are four common supply chain models. Besides the three mentioned above, there is the Supply Chain Best Practices Framework.
A resilient supply network should align its strategy and operations to adapt to risk that affects its capacities. "Supply Chain Strategy Development" Retrieved 2014-3-25. Supply chain resilience is improved by collaboration across the network, supporting faster adaptation to supply changes.
It is not about responding to a one-time crisis, or just having a flexible supply chain. It is about continuously anticipating and adjusting to discontinuities that can permanently impair the value proposition of a core business with special focus on delivering customer satisfaction. Strategic resilience, requires continuous innovation with respect to product structures, processes, but also corporate behaviour.
Recent research suggests that supply chains can also contribute to firm resilience.Yasuyuki Todo, Kentaro Nakajima, and Petr Matous (2014) How Do Supply Chain Networks Affect the Resilience of Firms to Natural Disasters? Evidence from the Great East Japan Earthquake Regional Science Journal
Since the product design dictates multiple requirements on the supply chain, as mentioned previously, then once a product design is completed, it drives the structure of the supply chain, limiting the flexibility of engineers to generate and evaluate different (and potentially more cost-effective) supply chain alternatives.