Getting the right product to the consumer at the right price and at the right time is supply chain management and it indeed is the purpose of the businesses as well as the key to their survival. A supply chain is the set of organizations linked by one or more upstream and downstream flows of products, services, finances, or information from a source to a customer. Supply chain management is the management of such a chain. Simply put, supply chain management is nothing but the set of activities that are done to synchronize supply with demand. Though the act of storing, transporting and moving of the intermediate and finished products across the factories is as old as the business itself, but the term “supply chain” entered the public domain in late 80s. As such the supply chain was an important business consideration from early 20th century onwards, especially with the creation of the assembly line. The characteristics of this era of supply chain included the need for large-scale changes, re-engineering, and downsizing. Subsequently supply chain management underwent a metamorphosis as it gained prominence, and the companies saw the benefits in efficiently managing their operations, logistics and interaction with suppliers and consumers. This era of supply chain evolution is characterized by both increase in added value and reduction in costs through integration. The 21st century supply chain growth is characterized by the expansion of Internet-based collaborative systems.
Technological changes, particularly the dramatic fall in communication costs because of internet led to higher coordination in the supply chain networks. This internet based collaboration led to the creation of Enterprise Resource Planning (ERP) which is a tool that allows companies to integrate their different business processes and helps them share a common database and thus produce real time information. This phase of supply chain was about true collaboration between suppliers, manufacturers and costumers that went beyond mere sharing of numbers. It was about a collaboration that was focused on shared thinking, planning and working towards a common goal. The companies had their own incentives to go global. The resources like skilled workers, raw materials or regulatory benefits available in some countries made them expand the network of their suppliers as well as the customers across different countries. The goal in modern supply chain management was to exploit expertise wherever it was available in the chain. The companies wanted to be ahead of others in the market. May be by providing an “experience” to customers when they come to shop, may be by competing on costs by virtue of better operations or may be by being more responsive to customers when they complain. And the companies had only one way to do all this. Pay attention to their supply chains. Previously companies mostly had a vertical integration model. It means that each company procured its own raw materials and delivered its own finished products. Starbucks and Tesco are the companies that follow vertical integration model. But horizontal model of supply chain is gaining prominence now. The ability to quickly obtain and deploy the domain-specific supply chain expertise without developing and maintaining an entirely in-house competency is a leading reason why supply chain specialization is transforming into a horizontal model. The inspirations and lessons of supply chain:
Having seen different facets of supply chain development, let us have a look at the biggest stories of supply chain ecosystem. This will help us understand the evolution of supply chain. Dell: When its rivals were offering pre-configured models to the customers with minimum options to choose from, dell, through its website, deployed its direct model to offer customization not just to companies but to individuals as well. Dell designed its supply chain to “make-to-order” and “ship-direct” at a time...
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