What is the best way to define a supply chain network? And, what makes it be so important for logistics, supply, and business managers? In a nutshell, a supply chain network allows us to look at the processes from a big picture. On the other side, it also provides us with a better understanding of materials and information flow. Very often organizations focus primarily on their internal structure. Meaning, they care only about what they produce and deliver. This also means that the things the end customer receives are left out of the focus.
A closer look at a supply chain network provides companies with an invaluable overview of all relevant movements of both materials and information from a process’ start to end. At the same time, organizations can evaluate the importance of partnerships from a different perspective, including the identification of new values, which can ensure the quality of services to the end-customers.
Both supply chains and supply networks describe the materials and information flow. Yet, it is worth emphasizing that a supply chain network is focused more on complex structures. These types of structures allow cross-linking and the essential two-way exchanges among the numerous organizations. On the other hand, supply chains are usually associated more with simple structures. That’s why, in order to ensure the best understanding of a supply chain network, it’s necessary to examine a supply chain first. A supply chain is a series of processes that are linked together with an aim of forming a chain.
The Supply Chain Network
Supply chain network shows the connections between organizations and how both information and materials circulate among them. The more details a supply chain network includes the more complex and web like these connections become. It’s always a good idea to map these connections or links, so you can come up with a complete picture of all information and material circulations and exchanges. Inefficiency can then be easily identified and removed or at least minimized.
- Material flow refers to the movement of goods from their raw or primary form all the way to the final or complete goods that are being delivered to the final customer.
- Information flow refers to all demands submitted by the end-customers to the organizations, which operate within the network.
In order to provide better services and deliver better products to your end customers, it is essential to use your supply network as a genuine platform for the development of strong and fruitful partnerships. Better communication combined with the reliable business partnerships will inevitably increase both efficiency and productivity.
In a separate article we will look at how to encourage your suppliers to be more strategic and how to help you avoid unnecessary risks within your supply chain.