Supply Chain Blog

Supply Chain, What’s That All About?

Posted by Dave Jordan on Wed, Dec 01, 2010

Ok, I will admit to something. I started my career as an R&D type who helped bring FMCG products to the market. Nobody really knew how a product made the transition from bench top and pilot plant testing to the supermarket shelves. Somebody must have been involved somewhere but this was hardly a cohesive team with job descriptions let alone aligned roles and responsibilities. Even then “somebody” was not part of the project team so with hindsight it was inevitable delays and mistakes would occur. “Somebody” was to blame every time!

Supply Chain Small resized 600Supply Chain departments stared to spring up in FMCG and Pharma companies as formal organisations around ERP deployment. Recruits were taken from other departments; commercial, manufacturing, sales and even R&D! Very few had any real understanding of Supply Chain requirements and they certainly did not have any formal qualifications or training. Qualifications and training are now widely available through many organisations such as CIPM and the Supply Chain Council.

I am not sure who coined the term Supply Chain though, do you know?

I have taken a few Supply Chain definitions from the internet and started with the individual word basics ex an Oxford English Dictionary

“Supply noun 1. An amount of something that is available for use when needed. 2 the action of supplying something.”

“Chain noun 1. A row of metal rings fastened together. 2 a connected series of things e.g. a chain of events.”

Seems reasonable but what about a more technical definition ex the Council of Supply Chain Management Professionals (CSCMP)

 “Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies. Supply Chain Management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model. It includes all of the logistics management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance and information technology.”

Wikipedia chips in with “A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier and customer. Supply chain activities transform natural resources, row materials and components into a finished product that is delivered to the end customer. In sophisticated supply chain systems, used products may re-enter the supply chain at any point where residual value is recyclable. Supply chains link value chains.

Who can resist asking the people at the aptly named Supplychaindefinitions.com?

“… the movement of materials as they flow from their source to the end customer. Supply Chain includes purchasing, manufacturing, warehousing, transportation, customer service, demand planning, supply planning and Supply Chain management.  It is made up of the people, activities, information and resources involved in moving a product from its supplier to customer.
Although this Supply Chain definition sounds very simple, effective management of a Supply Chain can be a real challenge.”

Investopedia.com offers up this definition which I particularly like as it highlights Supply Chain as a “crucial process”.

“The network created amongst different companies producing, handling and/or distributing a specific product. Specifically, the supply chain encompasses the steps it takes to get a good or service from the supplier to the customer. Supply chain management is a crucial process for many companies, and many companies strive to have the most optimized supply chain because it usually translates to lower costs for the company. Quite often, many people confuse the term logistics with supply chain. In general, logistics refers to the distribution process within the company whereas the supply chain includes multiple companies such as suppliers, manufacturers, and the retailers.”

Rightly, Supply Chain is now part of every company aiming to put a product in front of consumers whether this is FMCG, Pharma, Telecoms etc. However, is it seen as “crucial”? Even today I feel some companies still underestimate the value a “storming” Supply Chain team brings. In some companies Supply Chain does not have a discrete representative at the “top table” If you delegate Supply Chain management to your Sales Director then you should reconsider that decision. One way of ensuring sustainable sales uplift is NOT to report the Supply Chain community into another non-specific company director.

Tagss: FMCG, Dave Jordan, Pharma, Supply Chain, Forecasting & Demand Planning