First, let’s define Supply Chain. In its simplest form, a supply chain is the activities required by a business to deliver goods or services to the customer (also known as the consumer) This requires the movement of materials, data and cash between the suppliers and customers (consumers).
The major components are Sourcing, Making, and Delivery. The objective in supply chain management is to balance the demand and the supply.
It all starts with demand. Customers need something and place a demand on their suppliers. Suppliers work to fulfill the demands of customers.
For example, the family wants chicken dinner Saturday night. That is demand. The job of the Supply Chain is to satisfy that demand. The steps in the Supply Chain are:
- Understand the demand. There are four in the family. Dinner is Saturday night at 7:00. We’re eating on the deck
- You have a recipe for Barbeque Chicken on the grill. It takes about an hour to cook.
- Where do you get the chicken? Wegman's
You have done this before a hundred times. It is a no brainer.
Saturday morning you go to Wegman's to buy two whole chickens, a salad, and frozen fries.
At 5:30 you start the charcoal in the grill. At 6:00 you put the chicken on the grill.
At 6:30 the chicken is done. You serve the chicken on the deck. Voila, you have satisfied the demand.
Supply Chain Disruptions
- Neighbors show up at 6:45? – This is a change in demand.
- What happens if you did not have charcoal? – This is a disruption of making.
- What happens if Wegman's only has chicken thighs? What if they are out of chicken? – These are disruptions of supply.
In fact, these are all disruptions to your supply chain.
How does this example relate to recent events?
What we are experiencing today are disruptions in the supply chain.
- Ports are clogged affecting 40% + of Supply.
- Customers are panic buying, which means unstable demand.
- Manufacturers cannot find workers to unload the ships at the ports, manufacture goods, or transport goods to consumers.
- Trucking companies cannot find qualified drivers.
So, now you see how your Chicken Dinner, and everything else you use and need, has a supply chain associated with it.
About the Author
Gary Wood is the owner of Supply Chain Analytics LLC. He has experience with Supply Chains and Supply Chain Systems. He can be reached at firstname.lastname@example.org, at 585-313-7462, or at www.supplychainanalyticsllc.com.