How Do Supply Chains Function?
Supply chains are networks spanning a spectrum that run the entire gamut of the production and marketing of goods. Every person, organization, action, and resource involved in the process becomes a link in this chain. The main elements include: finding raw materials, manufacturing those materials into basic components, using the components to make a product, marketing and distributing that product, delivering it to the buyer and, finally, providing return services and customer support. In this way, every aspect is connected to the next, from the delivery of raw materials by suppliers to manufacturers, all the way to customer purchases. The segments directly connected to furnishing finished products to buyers are referred to as the distribution channels. When managed properly, supply chains can be optimized to enable companies to lower their costs, while at the same time increasing the speed of their production cycles.
Supply chain management (SCM) is a means of overseeing the process. The element of “flow” from one segment to the next can be identified as having three aspects: the product flow, the data flow, and the financial flow. And each of these contains three stages: the strategic stage, the planning stage, and the operational stage. Companies can consolidate and coordinate the various elements using SCM strategies, with the goal of improved efficiency, including a decrease in delays, which is a key consideration in today’s fast-paced world. According to marketing executive, Jack Grimshaw, “Modern consumers are expecting to receive their orders sooner than ever before. The digital marketplace continues to expand beyond the traditional retail business model every day, and with that, customer expectations grow. This has revolutionized the way that supply chain professionals must work to ensure orders are processed and fulfilled.” (https://supplychaindigital.com).
The Pandemic’s Impact on Supply Chains
To say that COVID-19 has been disastrous to world economies would be a gross understatement. The pandemic resulted in a great number of serious breakdowns in supply chains. Although companies that relied on international sources were hit the hardest, any weaknesses inherent in existing supply chains were brought into stark focus, and companies not up-to-date with supply chain trends were especially affected. From the disruptions caused by local lockdowns to the shutdowns occurring in overseas suppliers, many of which were located in China, glaring vulnerabilities soon became apparent. As supply chain strategist, Sean Harapko, observes, “The COVID-19 pandemic accelerated preexisting issues in the supply chain and brought priorities such as visibility, resilience and digitization to the fore…across the board, protecting, retraining and reskilling the workforce is a major priority, along with investing to make the autonomous supply chain a reality.” (https://www.ey.com).
Fallout from the COVID-19 pandemic has had long-lasting implications for the continuing functionality of supply chains. A case in point is the risk companies run when they engage in single-sourcing practices. Although this option is utilized primarily due to cost considerations, it tends to leave companies vulnerable to a number of supply chain hazards, especially in the event of a disruption such as the pandemic. As reported in a Gartner survey, 87% of companies adversely affected are planning to invest in supply chain resiliency over the next two years. As Gartner analyst, Gerain John, points out, “Supply chain executives overwhelmingly recognize the necessity to make their networks more resilient and agile.” He goes on to say, “At the same time, 60% admit that their supply chains have not been designed for resilience, but cost-efficiency. The challenge will be to create an operating model for supply that combines the best of both worlds.” (https://www.gartner.com).
Managing Supply Chain Issues
In order to identify any weak links, companies must carefully map out their supply chains, putting greater focus on understanding what may turn out to be hidden complexities, rather than simply paying attention to readily apparent aspects. Today’s supply chains need to be continually developed in order to step up to such evolving factors as increased consumer expectations and an ever-expanding number of marketing options, on both local and international levels. To this end, companies need to make use of real-time supply chain planning, instead of relying on strategies that have worked in the past. This includes finding solutions through technology, such as the use of automated cross-functional processes. Once successful networks have been strengthened, and new ones set in place, companies must then establish and maintain open lines of communication with each component of their supply chains, ensuring that any conflicts or vulnerabilities can be speedily resolved.
The energy put into managing supply chains directly translates to broader market possibilities, as well as to additional revenue sources. As supply chain manager, Chris Dunakin, explains, “Supply chain management is a multi-faceted process with many stakeholders and even more moving parts… Effective supply chain management offers numerous benefits for companies, so overcoming challenges to keep things running smoothly is a top priority.” (https://6river.com). One challenge companies often face is an increase in costs due to rising prices of the commodities and labor required throughout supply networks. It can also be challenging for companies to figure out how to navigate the complex environment of multiple marketing channels. Many of these difficulties can be overcome by predicting issues and dealing with them before they become problems. An overall management strategy that emphasizes building strong relationships, encouraging collaboration at every link, time and again has proven to be the most effective approach.
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OTIS KOPP
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Hello there! To meet new demands and supply chain challenges, the modern supply chain must evolve, and supply chain managers must plan ahead of time to keep everything running smoothly. Thank you, keep sharing.