Supply chain Terms Links

We introduce here the concept of logistic drivers making the link between the company s strategic objectives and their operational translation in the supply chain. These drivers are in line with the aim of logistics as defined by James Hesket (1977) in these terms Respond to demand at a given level of service at the lowest cost and also cross-check with Martin Christopher s dictum. Four in total, they incorporate in addition the new environmental component. We quote ... 

Walmart now tops the Fortune 500 list. For the last 25 years, the company has outperformed competitors. One of the reasons is Walmart s investment in supply chain management. A competitive advantage is Walmart s building and usage of a supplier network termed Retail Link. Today, you would not think of being a supplier to Walmart without the use of the Walmart Retail Link. 

The APICS dictionary defines the term supply chain as either the processes from the initial raw materials to the ultimate consumption of the finished product linking across supplier-user companies, or as the functions within and outside a company that enable the value chain to make products and provide services to the customer. The APICS dictionary defines value chain as those functions within a company that add value to the products or services that the organization sells to customers and for which it receives payment. ... 

For Example, Wal-Mart pioneered supplier visibility with its Retail Link. It continues to be the benchmark for supplier visibility and the power it provides for superior decision making by all participants in the supply chain. It provides visibility to suppliers on what has happened—POS (Point Of Sale), Inventory—and all ofthe factors the company needs to make smarter decisions about what to expect in the future in terms of demographics by store clusters, sales forecasts. 

Another source of confusion is the dehnition of the terms upstream and downstream in the supply chain. For a company in the middle of the supply chain with trading partners on both sides, we refer to the incoming side, the traditional domain of the procurement function, as the upstream side and the outgoing side, the domain of distribution, marketing, and sales functions, as downstream. To the end-user, the whole linked chain is a supply chain although that user only interacts with the last link. 

Few today dispute the need for collaboration in improving supply chains. Like flexibility, the term can mean different things to different people. Both companies on each side of a supply chain link must agree to the form of information transfer. That form can vary from electronic to face-to-face meetings. 

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. 

We point this out for an important reason. If a link in the supply chain is prone to this behavior, particularly if it is in a leading role, a dysfunctional supply chain will result. Each supply chain member will have to determine whether it is willing to do what is best for the long-term benefit of the supply chain. We return to this topic in our discussion of variability as a root cause for supply chain cost in Chapter 28. 

Synchronized supply chain A general vision of having all links in the supply chain producing at the same rate as customer demand. Obstacles include coordination, batch size limitations in production, and inability to share information. However, synchronization is a useful goal as it is likely to provide high levels of customer service at low cost relative to unsynchronized supply chains. The term is somewhat synonymous with a lean supply chain. 

This approach was originally developed, like lean thinking, in Japanese business practice and involves the creation of an extended networks of inter-linked suppliers within a supply chain, all of whom are focused on delivering innovation in products and services, either in the form of functional or cost reduction improvements. The practice normally involves the creation of extended long-term supplier associations focused on passing value improvements throughout the supply chain to the customer. 

From the supply chain network perspective, it is expected that the influence of lean supply chains focuses on establishing long-term links among the supply chain units and minimization of number of units and links. The lean supply chains aim towards simplifying and streamlining the supply chain network, while providing a high level of standardization and specialization. 

The success of the supply chain depends on the integration of the management systems used by its links, collaboration in the supply chain, the establishment of long-term relationships, the coordination of flows, the compatibility of information systems, and mutual commitment, responsibility and trust (Moberg, Speh and Freese 2003). 

Visibility is focused on resources and, in particular, inventories (inventory visibility). This means that resources are visible in the supply chain and can be noticed from any link, thus making it possible to monitor the inventory level in the entire supply chain. Velocity means the capacity to meet needs (fulfilment velocity) or fulfil a contract in a short time. Versatility consists in the capacity to collaborate with suppliers and purchasers when faced with various terms of delivery (coordination versatility). These are the three pillars of adaptive supply chains. According to Ivanov, Sokolov and Kaeschel (2010, p. 411), a supply chain may be called adaptive if it can adapt to ... 

Change information sharing to medium-high, e.g. communicate capacity planning, IT-integration of supplier, ask supplier for short and middle term plan if convenient, digital links among supply chain partners... 

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