Supply Chain Foundation | Supply Chain Explained – procurement | manufacturing | operations
Supply Chain Foundation | Supply Chain Explained
Why should you care about supply chain management? Why do companies care about supply chain management? You know that food is always at the grocery store. And clothing at the department store. But how did those items get there? And, who’s making sure those items are there every single day? This is the job of a supply chain manager.
My name is Vivienne, and I have been in the software line for 10 years in the field of software development. In this video, I want to share with you the fundamentals of supply chain management, from how companies choose and manage suppliers, to how companies turn supplies into things consumers want. And then, we’ll see how companies get those finished goods into the hands of the people that want them. Many people think that building a great supply chain is all about cutting costs. It’s really about developing supplier relationships and building reliable business processes that keep customers happy and wanting more.
So what is supply chain management? Well, supply chains make and deliver 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. 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? Thinking through 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 the health inspector requires certain ways to clean and store food? Is your company prepared to deal with all of those issues?
Supply chain managers are ready for all of that, procurement, operations, and logistics. These are the primary parts of a modern supply chain. Every product has a story. It’s a 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 are 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.