Join Eddie Davila for an in-depth discussion in this video Understanding parts of a supply chain, part of Supply Chain Foundations.
- So, what is supply chain management? Well, supply chains make and delivery things. You might not know it, but most of us make something every day. To help visualize this, let's take a simple thing many of us have made before, a sandwich. You can have it later today when you get to the office. So, what do you need to make that sandwich? Well, I guess it depends, but let's make a really good turkey, bacon, Swiss sandwich. We'll need fresh bread, some high quality sliced turkey, a nice slice of Swiss cheese, and some delicious bacon.
All right, let's add some lettuce, tomato, and mayo. So, how do we begin? In supply chain management, we start with purchasing. Some people call it procurement. So, what's your favorite grocery store? Why do you like them? Even if you like them, they may not have all the ingredients you want for your sandwich. Maybe you want the bread from your favorite bakery. Perhaps the best veggies come from the farmer's market. In any case, you had your preferences, you had a budget, and for some of you, you just needed to buy your stuff from the most convenient grocer.
In any case, procurement of your materials is now complete. Let's move on to stage two of supply chain management. Manufacturing and operations. This is the part where you've moved from gathering your materials to actually making something. Time to put the sandwich together, but it's getting late. You have to hurry to get to work on time. Still, you want to toast that bread. The bacon needs to be cooked, plus you need to slice the veggies. Don't forget to put away the leftovers and clean up that mess. Doing these things the right way, doing them quickly, and being able to do this on a day-to-day basis, that's what the folks in operations are doing every day.
Without them, there is no sandwich. Not quite done yet, though. The third stage of supply chain management is logistics and transportation. You can't take the sandwich to work like that. How will you protect it from the outside world? How can you ensure it will be fresh and yummy three or four hours from now? Where will you store it at the office, and how will you actually get to the office? Okay. So, it's going with you. So, transportation is taken care of, but packaging and containerization need to be considered. Do you have those things available? Is that a brown bag or a plastic bag? How do you plan to transport this? Thinking through the transportation and containerization is something you'll want to think about for the future, when you repeat this process.
Congratulations. The supplies have been turned into a wonderful sandwich that is where you want it, when you need it. That's what supply chains do. They buy things, make things, and move things. But that was one sandwich. How about if you had a restaurant that made hundreds of sandwiches a day? How about if your restaurant wanted to offer all sorts of sandwiches and sides? What if someone wants to place a special order? What if customers want organic ingredients from a socially responsible supplier that is local? What if the health inspector requires certain ways to clean and store food? What happens if you plan on delivering food to customers? Is your company prepared to deal with all of those issues? Supply chain managers are ready for all of that.
That's what they think about. That's what they do. Procurement, operations, and logistics. These are the primary parts of a modern supply chain. Every product has a story. It's the supply chain manager's job to write that story and give it a happy ending. So, let's turn you into a storyteller. Consider one of your favorite purchases, your car, your phone, a shirt, a meal, or maybe a stay at a nice resort. Who were all the important characters in giving that story a happy ending? Who purchased the raw materials, parts, or ingredients? Why was that important in ultimately making you happy? Which characters took those materials and made them into what you wanted? What were the important elements in actually getting the item or service right to you? The happy ending to your purchase was what you expected when you made the purchase, but now, as a supply chain manager, you begin to understand the skill, dedication, and collaboration that was required to make you and all of those customers happy.
- Identify parts of a supply chain.
- List the keys to successful global supply chain management.
- Describe the concept of inventory in supply chain.
- Explain how to choose a supplier.
- Work with SCMs in different industries.
- Describe how to transport and distribute your product.
- Integrate and coordinate the entire supply chain.
- Create ethical and sustainable supply chains.