In my many years of working in various industry sectors, I have seen different organizational structures and heard differing opinions of what a Supply Chain is and what the role of the supply chain manager is. In this article, I want to share with you the insight I have formed about what a Supply Chain is and what its role is.
What Is a Supply Chain?
In more traditional industry, segments there are examples where a manufacturer has integrated backward i.e. bought suppliers of critical raw material and/or has integrated forward i.e. bought wholesalers/merchants or converters of their products to try and better manage the supply chain. An example of this would be where a large papermaker would buy pulp producers and forests and buy a packaging converter. This is obviously a hugely capital-intensive approach to gain control and influence of the supply chain. It is my contention that by choosing very carefully the right pulp producers and the right packaging converters an effective “virtual” supply chain Network can also be realized.
Some industries, manufacturers and customers treat their vendors with disdain and contempt and then are surprised when their supplies are erratic and unpredictable. Those businesses that treat vendors in the way that they would like their customer to treat them usually have the most stable and reliable supply base. This does not imply paying more for your supplies than you should, it is about being fair and equitable and helping each other achieve objectives and continuously improve.
I have also come across too many examples where supply chain is defined as a function rather than a process that works across the entire business to ensure that demand and supply are optimized to meet customer requirements and reduces total cost for the business. In these businesses, supply chain thinking tends to be limited to the what happens inside the fence i.e. from the inbound warehouse to the outbound docking station.
Is Effective Supply Chain Management a Strategic Imperative?
In my reading and analysis over the years, I came across two great descriptions of what an effectively managed supply chain would deliver.“Supply chain management is the practice of incorporating a company’s social, environmental and economic goals into the coordination of inter-business processes to improve the long-term economic performance of the individual company and its supply chains.” –The Network for Business Sustainability“
The demands of today’s supply chain management are both moral and financial – the positive actions of suppliers along the supply chain are critical to the success of any organization. Conversely, involvement with suppliers engaged in unsavory activities–environmental damage, child labor–will reflect poorly on the organization at the top of the chain.
No longer is it good enough to evaluate the supply chain in mere profit-driven terms. Modern supply chain management is a holistic exercise. And that’s a good thing, regardless of how tough that may be to execute.” – Procurify, Sean Kolenko I think these two quotes perfectly encapsulate my own findings and insights based on what I have experienced. My long-held view is that supply chains are virtual–a network of businesses that compete with other networks to satisfy customer needs and demands. To ensure that a network of businesses is effective, there are two very specific areas to excel at:
- The due diligence and selection of partners and suppliers to partner with
- The deployment of the best processes, technology, and people in the business
Reveal Has Chosen the Core Focus on Moral and Financial Aspects of the Supply Chain
“Reveal believe the supply chain is an indispensable link toward commercial success and social good; it is our goal to create ongoing value–our most elemental methodology—for both. The very core of our business is built on giving back. We donate our time and a portion of our proceeds to non-profit initiatives whose efforts resonate with our own: helping the disadvantaged children of the world receive the products they require—food, water, education, shelter, and solace.
To go beyond, to reveal hidden value, this is the potential of the supply chain. Its purpose is our purpose. Together, with our partners, people and technologies, we help companies deliver their right products, at the right place at the right time.”