A supply chain refers to a chain of actors and activities whose mission is to provide a customer with products and services. The entire supply chain can be represented by five main processes: procurement, production, distribution, contact with the customer, all of which are covered by planning.
In a broader sense, the term "supply chain" also refers to a development concept aimed at optimizing this supply chain.
What characterizes it:
- A transversal approach that focuses on processes rather than professional excellence.
- An overview based on software integration and data exchange.
- A hands-on approach: for each individual case, we apply the best solution.
When the process takes into account the end consumer and suppliers of suppliers, then we are talking about the global scale of the supply chain.
When did supply chains appear?
In the process of origin and development of any activity, enterprises go through various stages: development, maturation and optimization. In general, the economy is replaced by several periods, each with its own organizational methods and tools that meet the requirements of the moment.
Since the turn of the century, demand has exceeded supply, it was necessary to produce as much as possible while controlling costs. The period of mass production led to the emergence of "Taylorism" and methodology of the Scientific Organization of Labor.
60s – 70s: mastering increasingly complex products and forecasting demand. To accomplish these tasks, MRP-systems (a tool for planning the requirements of materials and components) and ACS (Automated production control systems) were used.
Competition began to emerge. For most industrial enterprises, there were still prospects for development, but since the end of the seventies, in view of saturating markets, competition has become increasingly fierce.
70s-80s: internationalization further intensified competition, it became necessary to adapt to the inconsistency of customers, to their increasing demands on terms and quality. During this period, Japanese companies developed rapidly, as they were the first to develop adequate solutions. It was a period of just-in-time inventory minimization (just-in-time production, procurement, manufacturing and delivery to the customer just in time, with virtually no intervening stocks).
Since the 1990s: internationalization has continued, experience in distribution has grown. In the manufacturing sector, the specialization of each enterprise in its main activity, modularity and the "just in time" system revealed the importance of logistics functions and coordination of actions between enterprises.
The combination of manufacturing and logistics supports the Supply Chain by developing an ERP system for planning and managing enterprise resources.
The concept of "Supply Chain" emerged and became official in the late 1980s and early 1990s through a number of constituent documents, including the creation of a Supply Chain Council initiated by 400 manufacturers and distributors, which defined terminology and tools (1996).
Display and synchronization of processes
The supply chain encompasses all activities involved in creating value. A feature of this approach is going beyond the firm, from its suppliers to the end consumer.
In practice, the process proceeds as follows:
- Breaking down, analyzing and linking existing processes.
- Fixing poorly performing processes and creating missing processes.
- Adapting these processes to be able to provide comprehensive and integrated guidance.
To do this, you need to prepare a complete mapping of all business processes and break down each process into sub-processes, procedures, work instructions and manuals. The benefit of such a display is that we get a general and detailed vision of the enterprise's supply chain: we know who does what, how he does it, who is his supplier and who is the customer. This guarantees us that nothing is forgotten, everything is under control and all the goals facing each link in the chain, each direction (production, procurement, human resources, technology, finance, etc.) coincide.
Building bridges between customers and suppliers, process participants
Very often, the activity of the supply chain is represented as a set of interrelated activities: from the initial supplier of the enterprise to the final consumer of the overall supply chain. And for the internal chain: from general leadership to site master – this is one voice, one information, one goal, shared in real time. If there is a delay in one of the links in the supply chain or the pace slows down: all links in this chain learn about this at the same time and interact to work out the optimal solution for the enterprise.
One of the keys to the success of an effective supply chain is the exchange of information in real time and the creation of a collegial solution by all, without exception, participants in the process. This helps to minimize response times and make corrective action plans for risks (interruptions in supply, inadequate quality, changing commercial demand, etc.) more effective.
