Posted in Operations & IT Articles, Total Reads: 1301
, Published on 11 May 2015
Now-a-days the term “Supply Chain” might be one of the most fascinating buzz word of any industry. In many organizations huge amount of the budget is allotted to make the Supply Chain of the organization more robust & competent. Variety of organizations see their Supply Chain as a single most factor for gaining the competitive edge in the market. As it is hard for any competitors to copy the Supply Chain strategies of any company, it is worth spending a good amount of budget in creating a robust Supply Chain.
Though a lot of strategic insights have been developed by a lot many Supply Chain professionals in this regard, one of the foremost strategy could be to impart your supply chain a certain degree of visibility or transparency.
So what do I mean here by “Visibility or Transparency in the Supply Chain”? There is nothing new in this concept but I thought of presenting the same in a more simplified way that will help others to understand with more clarity.
Let us understand this through a simulated scenario.
Have a close look on the above diagram. For a company “X”, let us assume the business model runs in the above way as mentioned in the diagram.
Let me explain the steps involved with a bit more clarity.
Assume the product in business is a Pull product & hence the business is demand driven. Hence the trigger starts when demand arrives from the customer to the category manager (CM) of that company.
There might be variety of categories / SBUs in an organization.
The Category manager (CM) is responsible for the profitability of that respective category.
Even one category might deal with many products.
Now the CM informs the respective procurement team of the company about the demand details (Qty. demanded & demand location etc.).
Step 03 & 04:
The procurement team now coordinates with the manufacturing vendor (Manufacturer of the product demanded) & simultaneously informs the same to the Logistics dept. with all the required info.
The logistics dept. now coordinates with the 3PL (3rd party Logistics vendor) regarding the Logistics possibility keeping the pickup location (Manufacturing vendor location) & demand location in view.
Step 06 &07:
The 3PL vendor now picks up the material from the manufacturing vendor & delivers the product at the demand location.
The whole process might seem simple here in this exemplified scenario. But imagine the same scenario runs for the case where there are few ‘00 3PL, few ‘00 manufacturing vendors, few millions customers (Demand locations) and moreover the whole operation is run by few ‘000 employees & few category managers are responsible for the profitability of those few categories of that company. Imagine how complex the diagram will be & how complex the Supply Chain might look like in this scenario.
In fact most of the retail business supply chains (irrespective of the types of industries) have these many complexities built around their respective businesses. More the complexity of the supply chain, more the information it associates with itself. These information might be of various types i.e. which product is present in which part of the lengthy supply chain for how many days, why it is not reaching its demand location in time & why it is contributing to lowering the efficiency of the supply chain of the business and many more.
In such cases, don’t you think all the stakeholders of the Supply Chain should be aware of all these information all the time, so that the respective department (i.e. Logistics dept. or Procurement dept. of that Category) can take immediate action in time to make the supply chain more agile & responsive?
This is exactly what I define as the “Visibility in the Supply Chain”. From my conceptual understanding, to make a supply chain of any business more competent, definitely there is a requirement of competent strategies. But before framing these strategies, it is even more important to make the supply chain more visible & transparent, so that strategies can be better executed further. There are various other ways to turn this visibility concept active, which might involve extensive application of IT services in the organizations. Keeping that application aside, let us concentrate more on the implication of this concept in todays’ supply chains.
This article has been authored by Panchanan Mishra from Great Lakes Institute of Management, Chennai
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