The concept of a supply chain is one that has evolved over time along with the processes and procedures that comprise it. Strictly speaking, the supply chain is a physical and/or theoretical link that connects manufacturers, warehouses, wholesalers, retailers, and finally customers. Until nearly the end of the 20th century, the links in the supply chain were people and paper. Manufacturers purchased raw materials and created products which resided in warehouses until acquired by wholesalers, who sold them to retailers, and on down the chain to consumers. In about the 1980s the supply chain experienced some revolutionary changes and those changes have continued to evolve at a lightning fast pace.
Todays supply chain is less aboupeople and paper than it is about electronics and concepts. The modern supply chain has been defined as a set of approaches used to efficiently integrate suppliers and clients (comprised of stores, retailers, wholesalers, warehouses, and manufacturers) so merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize system wide costs while satisfying service level requests.
With the advent of an Internet driven supply chain, even the relevant components have changed. While there are still manufacturers and warehouses and distributors, many of the functions that actually get the product routed, ordered, stored and delivered, are performed by software. The supply chain is no longer linear, but more of a circular connection between multiple companies that all interrelate and inter-react. It includes sales departments, accounting departments, customer service, marketing, and all of the other components that are part of making sales happen.
As the supply chain has evolved, so has the concept of supply chain management. Supply chain management has been called a combination of art and science that goes into improving the way a company finds the raw components it needs to make a product or service, manufactures that product or service and delivers it to customers.
There are three key aspects that have been identified as integral to supply chain management: base data preparation, planning and synchronization, and exception management and reporting. First, it is critical that all parties involved in the supply chain understand each others informational processes and are able to share basic data. In order to maintain the accuracy of all the various databases that must work together, population updates have to occur in an orderly fashion that everyone agrees upon in the very beginning.
The planning and synchronization process is crucial as well. All of the steps by which the supply chain process is to be managed and delivered must be agreed upon in advance and all parties must commit to them. All steps in both information processes and physical processes must be identified in order to be manageable. The steps necessary for exception management and reporting must also be uniform between all parties involved in a particular supply chain. The required exception triggers must be jointly implemented in order to spot and correct potential supply chain failure.
It is clear that the modern supply chain is very different from its predecessors and is still in a state of rapid change. Because of the interrelationships between the different parties involved and the dependency of their data management systems upon one another, it is more important than ever that appropriate discussion and coordination take place to avoid costly mistakes.