What is a supply chain? A supply chain is a complex network of people, businesses, and resources that is critical to the production of a product or service. In this article, we'll look at 8 of the most important business processes in a supply chain. Also, we'll cover how to measure the performance of your supply chain. And, we'll look at the consequences of a supply chain disruption. Let's dig in!
8 key business processes
Supply chain management involves various processes, methodologies, tools, and delivery options that help companies create value and maximize their competitiveness. Increasing global competition, rapid price fluctuations, and short product life cycles are among the factors that are contributing to the increased complexity of supply chains. Other factors that affect supply chain speed and performance include limited human resources, political issues, and changes in legislation. These issues require the participation of multiple organizations. A supply chain management strategy must take all of these into account to maximize the value of the organization's supply chain.
Developing and finalizing strategic plans is a crucial aspect of supply chain management. Proper planning can help align the supply chain with a business model, ensure collaboration among network members, and track the effectiveness of various strategies. Business owners must determine which suppliers are best for their specific needs and design a production method that fits those requirements. These plans must also be based on current market data and key performance indicators. In addition, companies must keep track of inventory levels and assess their performance.
Keeping track of customer service is another important part of a supply chain management strategy. Customers should have the option of contacting a company's customer service representatives for any issues regarding products and services. If the customer service is excellent, they are more likely to return to a business and recommend it to their friends and family. In addition, good customer service will also help the company retain customers longer than its competitors. In short, supply chain management has the ability to make a difference in the success of any business.
In addition to focusing on customer service, a strong supply chain will include a return and complaint process. This step will handle issues with defective or unused products. The process may also include inventory and transportation management. The most basic supply chain includes a company, its suppliers, and customers. However, most supply chains are complicated, so examples of supply chain management failures are helpful. The above-mentioned examples can help businesses understand how to handle these problems more efficiently.
Connected network of people, businesses, resources and technologies
The term "smart supply chain" refers to a network of people, businesses, and resources that move goods and services from one point to another. Its importance is increasing as more companies realize the benefits of connected systems. These systems allow decision makers to make decisions closer to the source of information and improve their efficiency. In the past, apparel retailers had limited information about the fabric mills that manufacture their products. These days, however, they have the means to understand the entire extended supply chain.
The term supply chain describes a coordinated network of people, businesses, resources, and technologies that play roles in producing, transporting, selling, and delivering goods. Supply chains are a critical link in the production process and enable companies to create efficient value systems and competitive advantages. To begin a supply chain, you must decide on your business's strategy. Once you've decided on a strategy, you'll need to define the different roles that each group will play and then develop a plan to execute it.
Ultimately, the goal is to maximize the performance of each link in the supply chain. A well-designed network allows for better efficiency and reduced costs. It also facilitates speed and flexibility by creating stronger connections and better backup plans. Developing a supply chain with this level of complexity will be a major challenge. With the right strategy, however, companies can create a sustainable competitive advantage by understanding how supply chains are connected.
Ways to measure supply chain performance
There are many ways to measure supply chain performance, but some of them are counterproductive, while others can be extremely beneficial. Performance metrics can help companies identify areas where they can improve and motivate employees to take action. For example, you might be able to increase the number of orders processed each day, by implementing means to reduce the number of movements in the supply chain. Another example is the time it takes to process purchase orders.
The perfect order KPI is a composite of several important metrics, including on-time delivery rate, in-full-delivery percentage, and total cost per item. The perfect order index can provide an overview of supply chain efficiency, while tracking the exact number of sales that arrive in perfect condition can help identify areas for improvement. To use this metric effectively, make sure you understand how it is calculated. It is crucial to understand how it works, as well as how it can help your business grow.
In supply chain-based businesses, customer service is of primary importance, so performance metrics should focus on enhancing customer service and quality. Delivery times are an excellent indicator of customer satisfaction, and so should be measured through the Cash-to-Cash Cycle Time (CCT) and Supply Chain Cycle Time. Other performance metrics you can use to measure supply chain efficiency include Cost of Goods Sold (COGS) and the On-Time Shipping Rate.
While financial metrics are the most popular way to measure supply chain performance, other metrics, such as operational effectiveness and customer service, are also important. While these metrics may seem irrelevant, they do relate to the key goals of your supply chain. While many measures may not be directly related to operational effectiveness and efficiency, they are useful for evaluating the overall health of a supply chain. So, how can you measure supply chain performance? Here are some tips to help you determine how to measure it accurately.
The agribusiness sector, for instance, faces a mismatch between stakeholders. For example, farmers and manufacturers are in conflict over how much food is produced and consumed. Supply chains can better align when they measure the right things. Dell thought that the fastest processor speed was the most important feature, but when they surveyed corporate customers, they learned that the fastest processor speed was not the best option. Then, they revised their product line and metrics to meet customer needs.
Costs of disruptions to supply chain
Disruptions can affect the entire supply chain, from the lack of resources on the production line to the shortage of raw materials at far-tier suppliers. These disruptions are not new, however. Supply chain professionals have faced similar challenges throughout history. For example, disruptions caused by natural disasters can cost upwards of $228 million in the U.S., while the DACH region can incur costs of around $145 million. The impact of disruptions to the supply chain varies across regions and industries, with U.S. firms spending more on assessing supply chain risks than their counterparts in other regions.
Disruptions in supply chains can have major implications for national security. A shortage of a key ingredient can cripple the nation's ability to protect itself and care for its citizens. These shortages can occur in a variety of areas, including pharmaceuticals, food, and energy. A disruption in one industry can affect adjacent industries as well, raising the risk of conflict. Moreover, disruptions can be so severe that a national government can take action, potentially leading to global economic disaster.
The effects of supply chain disruptions are increasing. Many companies are taking a fresh look at risk in sourcing and inventory planning. Amongst the top concerns for firms are rising labour costs in their suppliers' countries, and geopolitical risks. The continued disruption has prompted companies to rethink their strategies in response to the threat. 60% of firms said redundancy and resilience are more important than speed in their supply chains.
Consumer prices have historically been low, but recent price hikes are directly related to supply chain disruptions. While this might seem like a trivial cost to some, it's important to understand the true costs of disruptions in supply chains. While the costs associated with these disruptions have been relatively low for the past two decades, they have recently been significantly inflated. This has led to higher prices for many goods. If disruptions in the supply chain do not alleviate these costs, then companies will feel the pinch.
Disruptions in supply chains often result from a collective event or market failure that requires a large amount of collective action to remedy. In many cases, this means external actors will have to find a way to avoid conflict and counterproductive disruption. Identifying the causes of the disruptions in supply chains can help minimize them. These disruptions are likely to continue into the future. The impact of these disruptions will be felt in multiple ways.