The Supply Chain Concept

This chapter is geared towards readers with limited time, offering a brief introduction to the supply chain concept, its major practical application and advantages. 

As is the case with every good idea, the concept of supply chains is easy to understand but extremely complex when you begin looking at its finer points. 

The Table of Contents at the beginning of the book, or the keyword and illustration indexes at the end of the book can provide a quick reference for further information on a desired topic. 

In a buyer s market, it would seem that everyone has finally recognized the need for a business s consistent customer orientation. 

Among the major characteristics of consistent customer orientation are the ability to make fast and reliable delivery commitments (volume, deadlines) and to dependably adhere to them. 

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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 ... 

In market economies, however, companies are confronted with competition when selling to customers and they use the market competition when purchasing from suppliers. On the other hand, market constellations can change, when many customers compete for limited resources or raw materials provided by few large suppliers. In these situations, prices, values as well as ensured profitability within each company are decisive for the sustainable survival of the business. While the supply chain emphasizes the supply aspects including ensured supply and availability (Corsten 2001, p. 94), an essence of Porter s value chain underlining the value focus and the supply chain concept is required as basis for the study. 

Simchi-Levi, D., Kaminsky, P., and Simchi-Levi, E. (2000). Designing and Managing the Supply Chain. Concepts, Strategies, and Case Studies. Irwin/McGraw-Hill, Boston. 

The trend for companies to focus on core competencies has forced enterprises to collaborate closely with their suppliers as well as with their customers to improve business performance (Lutz et al. 1999). The next step in the supply chain concept is the production or supply networks (Figure 15), which are characterized by intensive communication between the partners. TTie aim of the system is to allocate among the collaborating partners the excess in production demand that could not be faced by one of them alone. This capability provides the entire network with the necessary flexibility to respond quickly to peaks in demand for the products. A tool developed at the Institute of Production Systems at Hanover University, the FAS/net, employs basic methods of production logistics to provide procedures for the efficient use of capacity redundancies in a production network. The tool satisfies the following requirements derived from the capacity subcontracting process ... 

In Chapter 2 we will define the snpply chain and the companies involved, and show several examples. In addition, we will discuss the development and effective use of process mapping. A complete supply chain and process map of a specific organization will be presented in order to introduce the supply chain concept. This will help identify who the players might be for your organization. 

Simchi-Levi D., Kaminsky Ph., Simchi-Levi E., 2003, Designing Managing the Supply Chain. Concepts, Strategies Case Studies, 2nd edn. New York McGraw-Hill/Irwin. 

The supply chain concept encourages businesses connected by a supply chain partnership to ignore all legal barriers that seemingly lie between them and to set up the performance network as if the total performance were to be rendered by a single enterprise. 

The supply chain concept encourages you, among other things, to eliminate the waste of time and resources between your suppliers and your subcontractors, for example. Keep in mind that both you as well as your suppliers need to test for quality, warehouse, stock, outsource, etc. All this unnecessary and redundant work raises the cost of your service and products but does not enhance their value by as much as a red cent. 

The supply chain concept gives you the opportunity to design and fine-tune all supply and performance processes throughout the entire inter-corporate supply chain for all participating partners with a specific objective in mind, e.g. minimizing time and costs. 

The supply chain concept is one of the few organizational concepts that makes sense both micro- and macroeconomically. 

What other benefits can you derive from the supply chain concept ... 

It will be exciting to learn where the supply chain concept will take us. 

The inexorable global competition and the never-ending opportunities of the supply chain concept today give us the chance to plan and embark on new roads with courage, intelligence, and enthusiasm. Roads that lead to intelligent enterprises with entirely new paradigms. After all ... 

In this case, bills of materials and work sheets do not necessarily exist. Yet everything indicates that we should remain true to the supply chain concept. 

The task is to shape inter-company supply chains and to constantly improve them in such a way as if all performance were to be rendered by a single responsible institution. After all your customers are only interested in the legal boundaries of the partner enterprises that take part in the performance processes to the extent that they have advantages in terms of time and price through the professional accomplishment of the tasks at hand. Consequently, a supply chain should only include those processes which must actually be performed for the customer. The supply chain concept at the very least encourages us to eliminate the time and resource waste between enterprises and to plan and control the network of businesses as enterprise. 

Your supply chain management is extremely important to customers and earnings. The possible supply chain partnerships offer a wealth of chances. The supply chain concept is convincing. 

The supply chain concept is still so new that there are only a few books worth reading on the market. And, these books tend to concentrate more on the basic idea of process optimization than on inter-corporate optimization of supply chains. 

The supply chain concept is useful when considering the dangers associated with any particular article or substance used at work in that it allows consideration of a number of sources of hazard and risk. For example, purchasing non-flame retardant curtains and furniture coverings for an area in which people are allowed to smoke, such as a work s social club. 

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