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Supply chain

A supply chain, sometimes expressed as a "supply-chain",[1] is a complex logistics system that consists of facilities that convert raw materials into finished products and distribute them[2] to end consumers[3] or end customers.[4] Meanwhile, supply chain management deals with the flow of goods within the supply chain in the most efficient manner.[5]

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.[6] Suppliers in a supply chain are often ranked by "tier", with first-tier suppliers supplying directly to the client, second-tier suppliers supplying to the first tier, and so on.[7]


The phrase "supply chain" may have been first published in a 1905 article in The Independent which briefly mentions the difficulty of "keeping a supply chain with India unbroken" during the British expedition to Tibet.[8]

a "direct" supply chain involves a company, a supplier and a customer

an "extended" supply chain includes suppliers of the immediate supplier and customers of the immediate customer

an "ultimate" supply chain includes all of the organisations involved in the supply of the product or service.

Marshall L. Fisher (1997) asks the question in a key article, "Which is the right supply chain for your product?"[15] Fisher, and also Naylor, Naim and Berry (1999), identify two matching characteristics of supply chain strategy: a combination of "functional" and "efficient", or a combination of "responsive" and "innovative" (Harrison and Godsell).[4][16]


Mentzer et al. distinguish between "direct supply chains", "extended supply chains", and "ultimate supply chains"; in their usage:


In each case, the flow of information and finances is part of the chain as well as the product or service.[10] Fazel Zarandi et al. add "buyer-seller relations" (at each stage), in addition to the flow of information, as the third main component of a supply chain.[17] Mentzer et al. remind readers also that the focus of a supply chain is on the product or service in its end state: they refer to "the supply chain for candy" and "the supply chain for clothing".[10] Individual supply chain actors may be positioned at different points in different supply chains: a bank, for example, may play a supporting role in certain supply chains, but acts as either the customer or the nearest supplier to the customer in the supply chain for security printing.


Brown et al. refer to supply chains as either "loosely coupled" or "tightly coupled":


These ideas refer to two polar models of collaboration: tightly coupled, or "hard-wired", also known as "linked", collaboration represents a close relationship between a buyer and supplier within the chain, whereas a loosely-coupled link relates to low interdependency between buyer and seller and therefore greater flexibility.[19] The Chartered Institute of Procurement & Supply's professional guidance suggests that the aim of a tightly coupled relationship is to reduce inventory and avoid stock-outs.[19]

Mapping[edit]

Similarly, supply chain mapping involves documenting information regarding all participants in an organisation's supply chain and assembling the information as a global map of the organisation's supply network.[24]

accuracy: referring to the difference (if any) between forecasted demand and actual demand. The ability of a supply chain to respond to customer demand is the most significant factor and functions as a predictor of successful delivery throughout the chain

Demand forecast

Perfect : orders which are complete, accurate, on time and in perfect condition

order fulfillment

Supply chain cost, combining all sourcing, production, distribution and customer service costs.

[38]

Supply chain managers are under constant scrutiny to secure the best pricing for their resources, which becomes a difficult task when faced with the inherent lack of transparency. Cost benchmarking helps to identify competitive pricing within the industry but benchmarking across a range of supply chain performance factors has been recommended as best practice.[36] The SCOR model contains more than 150 key indicators which measure the performance of supply chain operations:[37] see also Supply chain operations reference#Performance measurements. Debra Hofman has noted that "measuring supply chain performance is not a new practice. Most companies today measure at least some aspect of their supply chain and understand the need for a more comprehensive measurement program." However, the abundance of options for potential performance metrics to use is seen as a challenge for supply chain managers. One approach is to relate multiple measures in a hierarchical structure so that interdependencies and the contribution of multiple indicators to the "key" or most significant imetrics can be more easily seen. Hofman suggests that the three key indicators of a well-functioning supply chain are:


A Cranfield University boardroom survey in 2010 found evidence that many organisations recognised the importance of the supply chain contribution to their business success, with a focus on cost, customer lead-time and customer quality being the primary performance indicators.[39]

Resilience[edit]

Supply chain resilience is "the capacity of a supply chain to persist, adapt, or transform in the face of change".[40] For a long time, the interpretation of resilience in the sense of engineering resilience (or robustness)[41] prevailed in supply chain management, leading to the notion of persistence.[40] A popular implementation of this idea is given by measuring the time-to-survive and the time-to-recover of the supply chain, allowing identification of weak points in the system.[42] More recently, the interpretations of resilience in the sense of ecological resilience and social–ecological resilience have led to the notions of adaptation and transformation, respectively.[40] A supply chain is thus interpreted as a social-ecological system which – similar to an ecosystem (e.g. forest) – is able to constantly adapt to external environmental conditions and – through the presence of social actors and their ability to foresight – also to transform itself into a fundamentally new system.[43] This leads to a panarchical interpretation of a supply chain, embedding it into a system of systems, allowing to analyze the interactions of the supply chain with systems that operate at other levels (e.g. society, political economy, planet Earth).[43] For example, these three components of resilience can be identified in relation to the 2021 Suez Canal obstruction, when a ship blocked the canal for several days.[44] Persistence means to "bounce back"; in our example it is about removing the ship as quickly as possible to allow "normal" operations. Adaptation means to accept that the system has reached a "new normal" state and to act accordingly; here, this can be implemented by redirecting ships around the African cape or use alternative modes of transport. Finally, transformation means to question the assumptions of globalization, outsourcing, and linear supply chains and to envision alternatives; in this example this could lead to local and circular supply chains.


Supply chain resilience has been identified as an important business issue. The United Kingdom's Confederation of British Industry reported in 2014 that a significant number of businesses had reshored parts of their supply chain to European locations, with many identifying supply chain resilience as "a key factor in their decision to do so".[45]

Social responsibility[edit]

Incidents like the 2013 Savar building collapse with more than 1,100 victims have led to widespread discussions about corporate social responsibility across global supply chains. Wieland and Handfield (2013) suggest that companies need to audit products and suppliers and that supplier auditing needs to go beyond direct relationships with first-tier suppliers (those who supply the main customer directly). They also demonstrate that visibility needs to be improved if the supply cannot be directly controlled and that smart and electronic technologies play a key role to improve visibility. Finally, they highlight that collaboration with local partners, across the industry and with universities is crucial to successfully manage social responsibility in supply chains.[46] This incident also highlights the need to improve workers safety standards in organizations. Hoi and Lin (2012) note that corporate social responsibility can influence the enacting of policies that can improve occupational safety and health management in organizations. In fact, international organizations with presence in other nations have a responsibility to ensure that workers are well protected by policies in an organization to avoid safety related incidents.[47]

Regulation[edit]

Supply chain security has become particularly important in recent years. As a result, supply chains are often subject to global and local regulations. In the United States, several major regulations emerged in 2010 that have had a lasting impact on how global supply chains operate. These new regulations include the Importer Security Filing (ISF)[52] and additional provisions of the Certified Cargo Screening Program.[53] EU's draft supply chain law are due diligence requirements to protect human rights and the environment in the supply chain. [54]

Supply-chain sustainability

Digital Supply Chain

Software supply chain

Freight forwarder

Logistics

Supply chain attack

2021 global supply chain crisis

Supply Chain and Logistics Terms and Glossary