There are seven essential supply chain components or activities:
1.a process in place for determining the ultimate consumer needs
2.a process in place to design products to satisfy those needs
3.a process for stimulating demand (branding, pricing, displaying, merchandising, etc.)
4. process for managing materials
5.process for producing product
6.processes for warehousing and moving product to right location
7.a financial process to help in risk taking/management
HOW DOES THE SUPPLY CHAIN WORK?
Figure 2 shows a simplistic five-step example of how an integrated supply chain works. We have gone through the seven steps outlined earlier and have developed the consumer need, designed/developed the product, stimulated need, and put in place all the other processes needed to get the "stuff" from dirt to the customer's shelf.
1.Customers purchase the product.
2.Demand gets communicated throughout the chain as required.
3.Sourcing has been done for our primary suppliers and our suppliers' suppliers, and now the demand is being communicated throughout the chain as required.
4.We will make or assemble to demand to replace the product taken off the shelf at each step in the chain as required based on the com municated demand.
5.We will move product to the nodes in the chain as required based on the demand communicated.
The top arrow shows the flow of materials from "dirt" to the ultimate consumer. While this is occurring, cash is flowing in the other direction, the second arrow, to pay for the value-added benefits that are accruing in the supply chain. The arrow on the bottom makes reference to the multidirectional flow of information that is necessary to assure proper operation of the supply chain. For those of you familiar with the "plumbing chart" in MRP II, the flow of net requirements down the chart was originally revolutionary in its day, but when the feedback loops were added, the concept of MRP II became the powerful tool that it is (if used properly).
We have covered this material in an extremely simple fashion. I suggest reference be made to the SCOR model that can be accessed on the web at www.supply-chain.org.
The principles as you can see in figure 1 are simple: source, make, deliver with planning as the glue that holds it all together. As our supply chains grow, the complexity goes up exponentially. Figure 4 shows that well.
Successful supply chains have three major elements:
1.ownership—there is a vested interest to make it work. One should select companies with similar values to partner with in the creation of the supply chain.
2.collaboration—in today's world it is difficult to own it all. There is a need to collaborate with others to create this seamless supply chain to guarantee success.
3.invest/reinvest into information technology (a) in tools that decide what, where, when, and how much to buy, make, move, sell and then have the capability to measure the processes; (b) in knowedge, people, skills and learning—change will always be with us. Collaboration demands a coach for optimization and integration.
Fortune in 1994 stated that in the very near future competition will not be company against company but supply chain against supply chain. And let the best supply chain win!
To Be Continued
For balance of this article, click on the below link:
Need help in bringing this training to your company, may I
suggest that you forward this Web page to your leader. If you do,
we'll send you our Power-Point presentation, "7-Rules for Surviving in an Entirely New Economy."
To open the
"Forward to" form:
To stay current on Lean Management Basics and
Best Practices, subscribe to our weekly MBBP Bulletin... and we'll send you
presentation, "Introduction to Kaizen Based Lean Manufacturing™." All at no cost of course.
personal information will never
be disclosed to any third party.
what one of our 13,000 plus subscribers
wrote about the MBBP Newsletter:
"Great manufacturing articles. Thanks for the insights. I often share portions of your articles
with my staff and they too enjoy them and fine aspects where they can
integrate points into their individual areas of responsibilities. Thanks
Kerry B. Stephenson. President. KALCO
to Basics" Training for anyone ... anywhere ... anytime
6003 Dassia Way, Oceanside, CA 92056
West Coast: 760-945-5596