What are the basic components of a supply chain? How do these components interact? How do they influence each other? How can you plan for optimum performance between components in the supply chain?
What are the basic components of a supply chain?
To simplify it to its most basic elements, the supply chain is every event and process that encompasses the flow of materials, products, information, and money from end to end. The supply chain runs from initial supplier to end customer. There are many, many steps involved but the most basic parts are the suppliers, customers, vendors, and everything that connects them together.
How do these components interact? How do they influence each other?
Everything that happens in one area of the supply chain, affects both upstream and downstream. A cost increase ripples up and down the chain. A poor forecast creates the bullwhip effect and extra inventory piles up all along the chain. It’s pretty much a butterfly effect on every process/person/organization along the chain. Every component interacts directly with the ones right next to it (upstream and downstream), and indirectly with the rest. A well-defined, well-oiled supply chain understands how every component interacts/influences each other and plans for that. In fact, it is designed to take advantage of the interactions and add value along the way.
How can you plan for optimum performance between components in the supply chain?
The first step is to map out the current process, and the ideal process. Once you know the two, compare the differences and work from there. If there are missing components, work to integrate them into the chain. If there are too many components (or unnecessary ones), eliminate anything that doesn’t add value and refine anything that is inefficient. The key to creating optimum performance is to look beyond your own processes and try to create efficiencies that ripple up/down the chain. Work with suppliers and their suppliers to optimize receipts and orders, work with your customers to make things more efficient for them, and work internally to optimize your processes as well.
How are employee, equipment, facilities, and budget resources positioned along a supply chain? At any given point, how may one resource be more important than another? How might different types of industries place difference emphasis on these resources?
How are employee, equipment, facilities, and budget resources positioned along a supply chain?
It depends on the specific supply chain, and component along the supply chain, but ideally, the resources should be placed along the supply chain in the way that adds the most value and creates the most efficiency. For example, it doesn’t do anyone along the chain any good if a distributor is well funded and well staffed to receive 100k units