Downstream Supply Chain

Leverage-companies (i.e., purchasers or retailers) demanding upstream and downstream supply chain collaboration on greening initiatives. 

Toyota both hosts supplier managers at their facility and sends their own managers to supplier facilities to iron out potential issues. Thus, [47] claims that the company manages the downstream supply chain to stabilize order volumes and thus decreases variability faced by its suppliers through careful choice of variety offered, visibility of its data across the supply chain, a velocity that matches supply rate to demand rate. 

The term supply chain implies an increase in external partnerships as companies link their operations. A single enterprise that delivers a product or service will have an upstream supply chain for the raw material it needs and a downstream supply chain to end-users to distribute its product. However, it does not necessarily have to have partnerships with either set of enterprises. Partnerships are above and beyond traditional commercial, arm s-length relationships. Well-executed partnerships offer significant opportunities in most chains to quicken increased returns. Poorly executed efforts, on the other hand, may have the opposite effect. Understanding what kinds of changes are needed begins with understanding the traditional model exemplified by the quotation that opened this chapter. 

The most downstream supply chain unit observes an external demand, transmitted up on a supply chain as inventory replenishment orders move from one unit to another. It has been observed that substantial information distortion may occur during this transmission. This information distortion, known as the bullwhip effect, appears as an order variance increase as one moves up the supply chain. 

The customer advisory board creates a link between the company and the customer. Customers should be integrated into the development and optimization of supply chain processes in companies. The customer advisory board should have bi-annual meetings in order to talk about the performance of the company. The inviting company obtains insight into the most important interests and requirements of the downstream supply chain companies. Personal or behavioral aspects can make processes more efficient. 

The DIM lacks analytic methods for assessing remote downstream supply chain impacts of the destruction of a single facility or small group of facilities. 

The impact of the new build philosophies on the downstream supply chain processes can be judged from Figure 1.6. While the traditional inventory profile shows a maximum number of days of stock (shown in the shaded area) at finished product level, this is risky. It always seems that demand is greatest for the very items that are not available Postponing the decision on exact specification until as late as possible in the process, when we are more likely to know precisely what the end-customer wants, helps to create the much flattened inventory profile to the right of the diagram. These are issues to which we return in Chapters 6 and 7. (A development of this case, tracking what happened next, is Case Study 7.12.)... 

The Principal organization sought to manage the risks in the downstream supply chain through a process of close collaboration, effective communications and the building of trust within the relationships. The development of Performance Standards was not seen by the distributors as the imposition of a risk management strategy to protect the principal but rather a collaborative approach that resolved the risks within the chain to the mutual benefit of all partners. 

The existing information asymmetry is the third reason for risks in the food supply chain. With information asymmetry it is very difficult to develop a qualified risk management process. In addition, the diversity between the market power of the producers and the retailers plays another important role. Information that is readily available and accessible is required for downstream supply chain participants if they are to manage risks effectively. 

Chemical companies are also weak at looking for opportunities downstream of their own operations. Whilst most would recognise the need to understand the business of their customers, few look further downstream and try and understand their customer s customer. However, if your materials can reduce energy consumption or waste production in a final product, you reduce the costs further downstream and potentially change the value distribution across the entire supply chain. If you understand how your products are used downstream, you can share that value with your customers. 

Porter s value chain is one basis for the development of the supply chain. The term supply chain was created by consultant Keith Oliver in 1982 according to Heckmann et al. (2003). Compared to the company-internal focus of Porter s value chain, the supply chain extends the scope towards intra-company material and information flows from raw materials to the end-consumer reflected in the definition of Christopher (1992) a supply chain is a network of organizations that are involved through upstream and downstream linkages in different processes and activities that product value in the form of products and services in the hand of the ultimate consumer . Core ideas of the supply chain concept are ... 

The communication requirements of REACH ensure that manufacturers, importers, and their customers (i.e., downstream users and distributors) have the information they need to use chemicals safely. Information relating to health, safety and environmental properties, and risks and risk management measures is required to be passed both up and down the supply chain. The primary tool for information is the familiar safety data sheet (SDS) for all dangerous substances. 

Diego Alfonso Carvajal Pabon, VP-Exploration Pedro Rosales, Exec. VP-Downstream Federico Maya Molina, VP-Refining Claudia Castellanos, VP-Supply Chain... 

Furthermore, REACH includes new or increased demands on the bidirectional flow of data and information in the supply chain (Tide IV) and places demands on downstream users (Tide V). For instance, REACH includes provisions on safety data sheets for substances on the candidate list (Article 31 and Annex II) and forces suppliers of articles to actively provide information for the safe use of the articles (Article 33). In addition, REACH entities consumers to, without charge, request information within 45 days on the safe use of articles containing SVHCs in concentrations above 0.1 wt% (Article 33). It remains to be seen to what extent the increased flows of information will impact on the management of chemicals. However, companies that work with environmental management systems and companies located closer to consumers in commodity chains will probably seek more actively to decrease chemical-related risks. 

A collaborative study on the Human and Environmental Risk Assessment (HERA) of cleaning products between Cefic and the International Soap, Detergent and Maintenance Products Association (AISE) resulted in the risk assessment of several substances through the relevant supply chains. The project enabled downstream users to develop a better understanding of the final use and environmental endpoints of these products. A major result of the initiative has been the creation of a website where customers and consumers can be informed on the risks associated with specific substances. 

In particular, downstream chemical users will benefit from a more efficient and streamlined flow of information among the supply chain, allowing a more discerning choice of materials and enhancing the profit potential of new materials. 

Our results also capture the notion of double marginalization of the vertical supply chain where two independent firms, upstream and downstream, may end up with lower profits in the decentralized setting. The decentralized model also considers price ambiguity since the price information is not revealed between... 

Under REACH, manufacturers, importers and downstream users are required to demonstrate that the manufacture/import/use of a substance does not adversely affect human health and that risks are adequately controlled. Information on chemical properties and safe uses of chemicals will be communicated up and down the supply chain. 

Information upstream and downstream the supply chain will be improved (enhanced dialogue). 

The chemical safety assessment has to consider the manufacture or preparation of the substance as well as all identified uses. An identified use is a use of a substance or preparation containing it that is intended by a person involved in the supply chain or that is made known to him in writing by an immediate downstream user. The assessment shall consider all stages of the life cycle of the substance resulting from its manufacture and identified uses. The assessment has to be based on a comparison of the potential adverse effects of the substance with the known or reasonably foreseeable exposure of man or the environment, taking into account implemented and recommended risk management measures and operational conditions. 

Downstream users as well as any others in the supply chain have the obligation to inform up the supply chain in cases of new information on hazardous properties, regardless of the uses concerned or any other information that might call into question the appropriateness of the risk management measures identified in the safety data sheet supplied to him, which shall be communicated only for identified uses. 

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